Property Taxes

Condominium and Townhome Owners
Pay Disproportionate Amount of Property Taxes!

Evaluate the following situation and compare condominium property tax assessments with that of single family homes. Then compare the quantity and value of services received by the owners of each of these residences.

Consider you are the owner of a condominium in a 100-unit complex. The geographic boundaries and dimension of your condominium complex are very concise and compact. They occupy a relatively small geographic area. Now compare your 100-unit complex with 100 homes, in the same neighborhood, individually owned and built on separate lots. The 100 homes, by contrast, will fill several city blocks, many acres of land and extend the length of several city streets. Each street contains installed sewer and water lines. The streets are generally constructed of asphalt and embellished with sidewalks, curbs, storm drains, fire hydrants and etc. The streets are beautified with parkways and landscaping. City streets are illuminated at night with city maintained street lights. And the city streets will be patrolled by city police officers and city fireman. All these amenities are purchased and maintained with your tax dollars, few of which benefit the condominium owners.

On the one hand, condominium owners are required to maintain their own water and sewer lines, beautify their own streets and maintain the landscaping along their streets. Moreover, the condominium owners receive no police or fire patrol (city police and fire budgets are in fact predicated in part, upon the distance of areas patrolled.). On the other hand, condominium owners do not receive direct benefits from local governments in the same ratio as single family homeowners for any of these public-funded amenities. For example, if a vehicle is abandoned on the city street, the police will tag the vehicle and subsequently tow it away. But request your local police to tow an abandoned vehicle from condominium property and you will quickly be advised that “this is private property” and the city police will take no action. This is not to discredit the police but to illustrate the difference in services received by condominium owners as compared to the owners of single family dwellings.

However, both the condominium owners and the individual homeowners presently pay the same property taxes. While the condominium owners pay property taxes on the same basis as individual homeowners, the condominium owners receive only a fraction of the city and county services for which they are required to pay. This is unjust and inequitable taxation that needs to be changed.

I. NEW, AMENDED LEGISLATION

Section 1. An act to add Section xxxxxxx to the AAAAAAAAAAAAAAAAAAA Code and to add Section yyyyy to the ZZZZZZZZZZZZZZZZ Code relating to assessing condominiums, townhomes and common interest developments.

Section 2. Condominiums, townhomes and all common interest developments shall be identified as multiple family dwelling properties and assigned a characteristic classification rate pursuant to the same. Under the law, said properties shall be assessed, not only on the basis of the value of their property but also on the basis of the local government or city services received, so that all taxpayers may share equally the cost of government in proportion to the value of their property and in relation to the services they are able to receive.

Section 3. Assessing officers shall appraise condominiums, townhomes and all common interest developments under their jurisdiction for local taxation purposes as if the land were unimproved. Local taxes shall be calculated on the basis of the land being vacant in that the owners of the afore mentioned properties receive only a relatively small portion of the total service offered by the city or local government.

Section 4. Condominiums, townhomes and all common interest developments shall pay taxes for county, schools, special district assessments and all other such taxes using usual and customary taxing and assessing procedures that shall include the improvements constructed upon the property.

PROPERTY TAXATION

II. HISTORY AND THEORY

The original concept of taxing real property in the United States was derived from the English system of rating properties in certain ways during the colonial period. Using this system real estate was rated, for taxation purposes, in relationship to the annual revenue the property was expected to earn. The property tax rates however, varied according to the type of property and was set by the legislature. This system proved to be satisfactory, for the most, part because most of the property during this period was used as farm land.

With the continued population growth in this country and the increased use of land for homes and factories, cities and urban centers, real estate values began to change. Dependent upon location and use, the concept of property taxation required a fundamental change. The system of rating property was soon replaced by the ad valorem concept of taxing real property. Under this system, the property itself became the object of taxation and the value of the property its tax base. With this new taxation process, there emerged another concept that all property within a taxing district should be valued uniformly and taxed according to a uniform rate.

This new taxation concept transformed the property tax into a tax on capital values and required that each taxing jurisdiction set up specific administrative procedures that would insure both the proper level of property value for the different kinds of properties within the jurisdiction and their uniform assessment.

Since the determination of the value of the properties on the tax rolls is the prime function of the local assessment officers, without consideration of the benefits received from the community, the assessment function and value of the property has become the responsibility of the appraiser.

III. ASSESSING REAL PROPERTY

The responsibility of the assessor is to locate, document, and appraise all taxable property within its jurisdiction according to a predefined uniform standard. The objective of the assessor is that all taxpayers share equally the cost of government in proportion to the value of their property. The appraisal of real estate is a specialized procedure that is basic to all other assessment functions. Property valuation is derived at in a standard appraisal manner to produce an equalized assessment roll. The assessor is thus required to do two things: he must establish the market value of each parcel in his district, and he must equalize the tax burden. In addition to taxes on real property, assessments are also levied for sidewalks, curbs, sewers, lighting districts and other special items.

IV. BOARDS OF EQUALIZATION

To facilitate fairness of taxation, government regulated Boards of Equalization have been established. The Board of Supervisors of each County is the county Board of Equalization before whom the property owner may request a hearing if it is believed that owners property has been over assessed. The State Board of Equalization is an elective body whose function is to eliminate inequities resulting from the practice of the various county assessors and to equalize the tax burden throughout the counties of the state. A taxpayer may have the right to appeal not only to local Boards of Review but also to the courts. Property owners may also engage the services of expert appraisers to help determine the value of their property.

Property taxes are the most important source of revenue at the local government level. Property taxes are the principal source of revenue for most local government functions such as police and fire protection, schools, roads, parks, playgrounds, etc.

V. STATE AND LOCAL GOVERNMENTS

The property tax is shared by all levels of government and by several types of governments at the local level. These include county, municipal, school district, road district and other special district governments. Hence, the owner of property typically pays several different property taxes levied upon the same tax base. Moreover, for each of these separate property taxes the government agency imposing the tax may “classify” the tax by applying differential rates to the property depending upon its “type” or “use.” Thus, although the classified property tax is primarily structured by the techniques of exemption and differential assessment ratios which effect the “tax base,” differential treatment may also be accomplished by applying variable rates to different properties.