It is critical that homeowners associations are vigilant of the way in which their municipality assesses taxes on the community’s common area. Now that the 2005 property tax assessments are being mailed out, many people may have questions about how community associations should be taxed. An area that community associations should pay particular attention to, is how their common property areas are taxed.
Common areas include clubhouses, pools, and recreation areas such as playgrounds and tennis courts. In New Jersey, towns and municipalities may not tax a condominium’s common elements. It is generally believed, but not technically the case, that the common areas of a homeowners association enjoy the same tax protection.
Many associations are improperly assessed taxes on their common areas. Now is the time to review tax assessments and determine whether a tax appeal is warranted. We suggest the following:
1.Get a copy of your 2005 tax assessment. Your tax assessor will send you a small “green card” in January or early February stating the association’s tax assessment. If you do not receive the tax card, call the township tax assessor.
2.Review the tax card and determine if common property is being separately assessed. Is the clubhouse being assessed at its full value? Is open space being assessed as a building lot?
3.Review the association’s governing documents to confirm that the common property is specifically identified as common property, subject to restrictions on use and transfers.
4.If the common property is being separately taxed, call us to discuss filing a tax appeal. We may be able to help reduce the assessment to a nominal value or no value at all.
5. IMPORTANT: The deadline to file your tax appeal is April 1, 2005.
Should your homeowner association have questions regarding the assessment of its common property area, contact A. Christopher Florio, or Timothy P. Duggan to discuss your specific matter.