AZHOC - Arizona Homeowners Coalition
Voice for homeowner rights and justice.

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Are HOA residents DOUBLE taxed?

 

PAYING TOO MUCH FOR OWNING YOUR HOME? Have you looked at how much you pay to own your home?

It is said that you pay the Federal Government (IRS) the first three months of your earnings for the year.  Then calculate the amount that you pay your Local Government (county and cities) via Property Tax and Sales Taxes (from each purchase you make) plus add the Private Government known as the Homeowner’s Associations (private governing body) = ? added months of your earnings.

What do you end up with?  Bottomline, this affects EVERYONE (YOU and YOUR FAMILY). When you have to work extra hard just to make ends meet. When you lose TIME to WORK to pay your bills, sacrificing TIME with YOUR FAMILY.  What is more important?

Residents living in an HOA community pay Assessments and/or Special Assessments to the Association. This is on top of what is already paid in Property and Sales Tax.  In Arizona, each county is empowered to collect property taxes from every property owner.  In addition, each cities collects sales tax.  Both property tax and sales tax are used and allocated to each city to perform their duties to maintain Public Amenities (roads, parks and facilities),  but not the Private Amenities owned by your Homeowner’s Association.

The HOA and the Local Government (City) perform similar tasks:

(1) Code Compliance (City: Ordinance; HOA: CC&R) ;

(2) Maintenance (City: Public Amenities – street/road, school, pools, parks & recreational facilities; HOA – private parks, facilities, roads)

(3) Management (City: elected officials and employees of the City – Police, Fire ; HOA: Elected Board of Directors, Association Managers and Lawyers protecting the Board and Association Managers)

(4) Police Power (City – Parking Citation; HOA – Parking violation)

Where does it all end? Who is Who? Am I seeing Double? 

TAX and ASSESSMENTS is a duality.  LOCAL (City) and PRIVATE (HOA) is again another duality.

  • How much money does the city save by  not performing the tasks for HOA neighborhoods?
  • Shouldn’t we see a reduction of our taxes? If the city is saving on costs, shouldn’t we have savings as well?

What is a Homeowner’s Association?

“Homeowner Association (HOA) is a private association formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision.” (source: Wikipedia)

The association is structured as a private corporation and subject to the state’s corporation statutes and/or specific association statutes.
Does it follow the same model as the Federal, State or City government?

HOA model:

  • The HOA board is elected by the members within the subdivision that it is part of.
  • The board creates/modifies/eliminates laws for the community in the forms of CC&Rs (recorded).
  • The board creates rules and regulations that they can arbitrarily change. (unrecorded)
  • The board has the authority to enforce these laws (CC&Rs) through violations, fines, liens.
  • The board sets fees (taxes) and assessments (additional taxes) for the community members to pay.

HOA dues are mandatory for residents living in an HOA community. If a Home Owners Association is a government body that sets fees in the same way that the Federal, State or City government sets tax rates for the people it governs, why not consider HOA fees a tax and make it tax-deductible.

 

Below are scenarios that should be considered: (Remember, this is not a legal or tax advice.)

1. Make HOA fees Tax-deductible

Property taxes and automobile license tags are tax deductible. Why not HOA dues?

2. Tax Credit for HOA residents

The state of Arizona offers tax credits that allow tax payers to direct their tax money to the school and/or charity of their choice. Money donated to these organizations, up to a set dollar amount, is credited back to the taxpayer.

So why not city tax credits for citizens living in an HOA community?

The city would issues the tax credit to HOA homeowners, but not the full amount of the HOA dues since some HOA’s maintain swimming pools, club houses and other functions that cities do not maintain, but a percentage of the fees would be returned to the homeowner.

3. Eliminate duplication of duties

Just remove the duplication.  The city would be responsible for: Code compliance, Parking enforcement, Maintenance of the common areas in all neighborhoods.

The remainder of responsibilities (swimming pools, club houses, etc.) would be the responsibility of the HOA.

This should reduce HOA fees.  Also, it would increase homeowner value for all homes in the city by having one government body with one standard to enforce compliance.

An example would be parking on the streets. If the city forbids parking on the streets for one community, it would hold the same standard for all homes in that city. If the city requires winter yards for one set of homes, all homes would be required to plant winter lawns.

 

What are your thoughts?
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