CAI believes that common interest communities should not be taxed for
municipal services not provided. Separate assessment and taxation of common
property is unjust double taxation. Homeowners should be allowed to deduct
association assessments attributable to the performance of public functions.
Community Associations Institute (CAI) supports the following policies:
Property taxes imposed on homeowners of community association housing
should be imposed on the same terms and conditions as those imposed on other
homeowners. Separate assessment and taxation of the common property of a
community association is unjust double taxation.
The provision of public services to homeowners in community
associations should be equal to services provided to all other homeowners.
Otherwise, (a) public service providers should compensate community association
homeowners for the cost of services not provided or, (b) Congress and the state
legislatures should permit homeowners to deduct that portion of their community
association assessments properly attributable to the association's performance
of public functions, or to receive a credit equal to that amount.
Throughout the United States, community associations with
statutory or covenanted rights to assess their members for the maintenance,
management or upkeep of property operated for the common benefit and enjoyment
of their members have been bearing an ever-increasing burden of expenses and
obligations historically paid for and performed by units of local governments.
The unique character of the community association form of ownership has
frequently resulted in the value of common area improvements being improperly
assessed and taxed twice: first to the community association and second to the
individual association unit owners whose unit values reflect their exclusive
right, together with the other members of their association, to make use of
recreational buildings, swimming pools, tennis courts and similar common-area
Newly created community associations are increasingly required to provide
their members with what have historically been considered "municipal" services.
Association members must then typically pay the same local taxes as other
neighboring homeowners even though trash collection, road and sidewalks
maintenance and repair, street lighting, disposal of sewage, storm, flood and
erosion control systems, shade and ornamental tree maintenance, security patrols
for crime, disorder and public safety and other forms of public services are not
made available to them.
Notwithstanding the obvious privatization of public services, community
association members are doubly disadvantaged by not being able to deduct the
portion of their association maintenance assessments attributable to public
functions from their income for income tax purposes, as they can for municipal
There should be recognition that, apart from the homes themselves, common
property in condominium and homeowner association developments has no value or,
at best, a nominal value for property tax purposes. Since the title dedication
of that property is to the exclusive benefit of the association homes, the value
of the homes includes the value of the open space and improvements. Thus, any
portion of the services provided for private benefit – such as maintenance,
insurance and replacement of private buildings or portions of buildings occupied
exclusively by members of the association, recreational facilities whose use is
restricted to members of the association, and maintenance of restricted grounds
and accessory support areas such as parking lots and garages restricted to
members of the associations should be excluded.