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Tax Break For The Common Good

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The Tampa Tribune

Published: November 9, 2008

I am a member of a homeowners association. Recently, a letter written by the president of our board was sent to all owners. The letter pertained to a common area property that was deeded over to our community many years ago by the developer. I have a question regarding a sentence in the letter:

"I successfully petitioned the Property Appraiser's Office to reclassify the property from commercial property to common area, thereby eliminating the property taxes that the homeowners association has paid in the past. This has resulted in the elimination of the taxes paid in past years."

How are property taxes eliminated? Is this a correct statement?

M.S.
Fort Lauderdale
Your president is correct and to be congratulated for saving the association future property taxes.
Florida Statute 193.023(5) says the value of each home is increased by the ownership of common areas. So, theoretically, homeowners pay more in property taxes than owners of similar homes with no common areas. The statute exempts common areas from taxation because that would amount to the property being double-taxed.

A large amount of money in last year's budget was not spent. Our board refers to that money as a budget surplus. What happens to this money? Is it returned to the homeowners? Or can they receive a credit in the upcoming budget? Can the money be used for on other expenses?

W.I.

Davenport
Florida Statute 718, the condominium statute, says the money could be returned to the members, but I do not recommend that. The association would have to pay to prepare and deliver checks and for the bookkeeping involved. I would rather see a credit against next year's budget which would in effect lower your fees.

The surplus also could be used to pay for unexpected expenses. For that reason, some boards routinely transfer any surplus to their reserves.

There is a point here that most owners and directors do not understand. That is that the fees paid, the association's collections, and the assets of the association are each owner's prorated possession. In other words, the money is owned by each owner-member in their share percentage. If the budget has a surplus or a shortfall, each owner is accountable for their share. It is not a case where the money simply disappears.

Richard White is a licensed community association manager. He does not offer legal opinions; any other questions and comments concerning association operations can be sent to Richard White, 6039 Cypress Gardens Blvd., No. 201, Winter Haven FL 33884-4115;

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