HD37 - Report of the Joint Subcommittee Studying the Feasibility of Allowing a State Income Tax Deduction for Certain Homeowner Association Dues

  • Published: 1983
  • Author: Joint Subcommittee Studying the Feasibility of Allowing a State Income Tax Deduction for Certain Homeowner Association Dues
  • Enabling Authority: House Joint Resolution 100 (Regular Session, 1982)

Executive Summary:
The Joint Subcommittee Studying the Feasibility of Allowing a State Income Tax Deduction for Certain Homeowner Association Dues was established pursuant to House Joint Resolution No. 100 enacted by the 1982 Session of the General Assembly of Virginia.

The Joint Subcommittee was assisted in its study by the staff of the Virginia Division of Legislative Services. Specific staff assigned to the subcommittee were: W. Rand Cook, Attorney, and John A. Garka, Economist.

In recent years, residential developments and communities throughout the Commonwealth have taken the initiative to provide their residents with many of the services traditionally provided by local government. Through the formation of well-organized homeowner associations, to which all property owners are legally required to belong and pay dues, these developments have been able to provide services such as sewage, water, road maintenance and recreational programs.

These organizations are often classified for purposes of real estate law as condominium associations, real estate cooperatives or traditional homeowner associations. (The term "homeowner association" shall, for the remainder of the report, include all of the aforementioned forms of real estate ownership organizations.) The operating budget of a typical homeowner association closely resembles that of a local government; many of the line items are identical. This similarity, of course, reflects the fact that homeowner associations usually provide governmental-type services and actually function as a pro forma government. The underlying rationale for the formation of a homeowner association is, however, that residents who form homeowner associations do so in order to avoid additional layers of local government and reduce reliance on existing local government.

The crux of the issue studied by the Joint Subcommittee is that while many of the services provided by local governments and homeowner associations are identical, taxpayers paying for these services through property taxes are allowed a state income tax deduction while those taxpayers paying for the services through dues paid to homeowner associations are not. The Joint Subcommittee was formed to study the feasibility and equity of allowing such a deduction for homeowner association dues.