State, county laws are 'taxing' on HOAs

Editor’s note: Columnist Barbara Holland takes a break from her HOA Q&A format to talk about recent county taxes local homeowners associations are facing.

In a legislative session that produced some “taxing” new laws for associations, here comes some more taxing laws that could affect your association’s bottom line.

The Clark County assessor’s office has found a new way to increase revenue for the county. In 2009, the assessor’s office valued a particular Summerlin association, which has four clubhouses and a golf course, at $19.5, which would have required the association to pay a hefty property tax.

The association challenged this valuation and appealed this assessment to the Nevada Board of Equalization. In an appeal, the petitioner must present a case as to why the assessor’s valuation is not accurate.

The Equalization Board found in favor of the association and reduced the valuation to $2,500. The attorney who represented the association stated that the county did not take into account the noncommercial use of these facilities and therefore the assessment value should be reduced. In addition, the association presented evidence that the assessor’s value was too high based on the market value of the properties.

This particular case is important for associations with facilities such as clubhouses, community center, etc. The county assessor has lost in District Court and is appealing the decision to the state Supreme Court. If the Supreme Court finds in favor of the county assessor, the monetary consequences will substantially increase the operating costs for many associations. We will just have to sit and wait this one out until it reaches the high court.

On a separate tax issue, the assessor’s office is no longer calculating the transfer tax based on the amount of money that was owed to the association but is basing the transfer tax on what the assessor’s office thinks is the fair market property value.

When an association forecloses on a property and there is a recording of the deed that shows the property belongs to the association, it pays a transfer fee to the county.

In the past, if the association foreclosed on a delinquent owner for $8,000 it paid taxes based on the $8,000 even if the property sold was worth $150,000, as an example.

Now, to help build tax revenue for the county, the transfer fee tax is based on the market value and in this case based on the $150,000.

This is just another example of foreclosure costs being added to an association’s operating budget.

Between the Legislature with its new mandated collection laws and modification laws that affect associations, lawsuits pertaining to the superior nine-month lien, increased insurance rates because of the lawsuits and the assessor’s office finding new ways to tax associations, you can better understand why city, county and state governments run their businesses in the red.

An example of the Legislature raising taxes on HOAs is Senate Bill 60, which pertains to business licenses.

Associations are required to obtain a business license unless their articles of incorporation were established under Nevada Revised Statutes 82 or NRS 84. Associations that are not exempt are required to obtain or renew a business license.

If your association fails to obtain or renew its business license, your association could be fined $1,000 to as much as $10,0000.

In addition, SB 60 affected many community management and/or property management companies that serve as registered agents for associations.

Section 8 of the new law requires that any resident agent who represents 10 or more businesses must register with Nevada as a commercial registered agent.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q&A, P.O. Box 7440, Las Vegas, Nev., 89125. Fax is 702-385-3759, email is