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LisaD6 (Maryland)
Posts: 77
Posted:
We pay sales tax on rented units for services. that would be garbage collection and management fee. Am I thinking wrong to pass that on to the unit owner who does not live in the condo causing the sales tax to be added onto our budget as a cost. or is it minute to bring up.
one unit estimates 3 dollars. 3x12 36 x 10 brings it to 360.. We recently have an increase in rentals. investors are marching in. back when it was 6 units not a big deal now we have 10 units being rented. And what gets me is the owner is making money by renting and we have to pay sales tax per a state law. sounds backwards to me.
SheliaH (Indiana)
Posts: 6,964
Posted:
Why would the association be paying sales taxes at all? I can understand this when you buy supplies, but for rent? You may need to discuss this with your association accountant.

If there is a tax for services, is that because people are calling the contractor separately and telling them to send the bill to the association? If so, you can stop that by telling homeowners requests have to go through the property manager first, so he or she can confirm if the service is association responsibility. Otherwise, the homeowner must pay (even if it's association responsibility because the owner didn't follow the procedures).


If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
MelissaP1 (Alabama)
Posts: 13,836
Posted:
This is all confusing. It's not very clear. If the HOA pays sales tax then this should be part of the dues you charge your HOA members. Renters don't pay dues or HOA expenses. So it would require a possible dues increase to cover the additional expense.

Former HOA President
JohnC46 (South Carolina)
Posts: 14,265
Posted:
I think was Lisa is saying the HOA does pay sales tax on some items/services and she is looking for a way to pass this on to those renting their units.

I say interesting but out in left field thinking. That same tax would be paid on all units (renter or owner occupied) should be built into assessments (dues). She wants to double bang renters.

SheliaH (Indiana)
Posts: 6,964
Posted:
You got a point, John.

If that's what she wants to do, it might require an adjustment to the CCRs since all the community costs have to be shared by all homeowners, and if there's a growing number of investor-owners, that may be difficult to get them to sign off on that. That's why my community doesn't have a rental cap - by the time the board approved the final draft for homeowner review and approval, owner-occupants like me were already outnumbered by the investors.

That said, one of those investor-owners suggested that the community consider charging some sort of surcharge at the start and finish of the lease agreement, noting that tenants usually cost the association more money (wear and tear from the constant moving out and having to contact the owner AND the tenant about a problem). I thought that was reasonable, but of course, that didn't go anywhere. Until he sold his house, that homeowner was one of two I've met around here who were actually responsible landlords! He was even board president for a while and did a good job.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
CathyA3 (Ohio)
Posts: 6,299
Posted:
Quote:
Posted By JohnC46 on 11/11/2019 12:32 PM
I think was Lisa is saying the HOA does pay sales tax on some items/services and she is looking for a way to pass this on to those renting their units.

I say interesting but out in left field thinking. That same tax would be paid on all units (renter or owner occupied) should be built into assessments (dues). She wants to double bang renters.


Yup. Anything that applies only to a subset of owners would be discriminatory and illegal.
LisaD6 (Maryland)
Posts: 77
Posted:
Not banging the renters for anything. Renters dont pay through us..Maybe the owner will bang the renter for any increase to the owner
LisaD6 (Maryland)
Posts: 77
Posted:
YEp this will be the next issue. residential mortgages now have a cap on the amount of units being rented with condos before a mortgage is given. Aslo for FHA.. Mr investor comes in here buys up a lot of units then when he goes to sell BAM.. Locked in to stay cause too many rental units.
JohnC46 (South Carolina)
Posts: 14,265
Posted:
Our Covenants restrict any rentals during the first year of one's ownership. This has stopped investors/speculators.

We also turn a blind eye to parent/child rentals such as parents buy the place but child lives there and in one case, child buys the place and her parents live there. We do not count them as rentals as who knows the dynamics.
CathyA3 (Ohio)
Posts: 6,299
Posted:
Quote:
Posted By LisaD6 on 11/11/2019 2:09 PM
YEp this will be the next issue. residential mortgages now have a cap on the amount of units being rented with condos before a mortgage is given. Aslo for FHA.. Mr investor comes in here buys up a lot of units then when he goes to sell BAM.. Locked in to stay cause too many rental units.

Yes, this is an issue, and I don't think many owners are aware of it. Or they just don't care because they don't plan to remain condo owners for that long.

But I'm not sure what you can do about it other than get a rental restriction passed before you have too many owners who are landlords. (Easier said than done, I know.)

Worse than having too many renters is the so-called condo "deconversion" where investors buy up enough units to control the association and then turn the whole shebang into rental property. I recently read an article about a condo association in Chicago that fought back by passing a restriction that limits the number of units that may be owned by a single entity. Still won't address the issue with FHA certification or mortgage limitations, but can prevent a worst case scenario.

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