I have set up an independent living facility owned by the
nursing home which conveys “occupancy units” to the
residents. There is a buy-back provision.
The residents are not entitled to mortgage interest deduction, nor
homestead real estate tax deduction.
It isn’t set up as a condominium, though.
From:
realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Fadness,
Ronald D.
Sent: Monday, July 28, 2008 10:09 AM
To: Craig Hastings; Brown, Roger K.
Cc: realestate@iabar.org
Subject: RE: Condo
I would question the legality of conveying a condo unit without
including the appurtenant interest in the common and limited common
elements. Even if it were legal, I wouldn't wouldn't suggest buying such
a unit.
From: realestate-owner@iabar.org
[mailto:realestate-owner@iabar.org] On Behalf Of Craig Hastings
Sent: Monday, July 28, 2008 9:40 AM
To: Brown, Roger K.
Cc: realestate@iabar.org
Subject: Re: Condo
I don't think the situation is quite the same. I get the
impression that Cindy's client wants to sell the units but continue to own the
common areas and structures.
In the typical "property tax" condo conversion the
owner continues to own all of the units.
And, I would just say that the ones we have done generally
result in a significant decrease in property taxes. The Assessor will usually
increase the value of the property by the capitalized increase in the cash flow
due to the decrease in property taxes, but the residential rollback still
reduces the taxable value significantly.
Craig R. Hastings
Hastings & Gartin LLP
409 Duff
Ames, IA 50010
515-232-2501
On Jul 27, 2008, at 5:53 PM, Brown, Roger K. wrote:
The situation you describe has been tried by a number of
apartment building owners who seek to gain the tax benefits of having each
residential unit taxed as residential property and thereby gain the benefit of
the residential rollback.
Mr. Wilson is correct in identifying that the conversion of
an existing apartment building will trigger a requirement that the building be
upgraded to satisfy current building codes.
That may require an
apartment building to have a sprikler system, depending upon the height and
number of units. The cost of
installing a sprinkler system may offset any tax advantages.
Your client might also be suprised to learn that the value
of 50 separate condominium units will likely add up to a total which
substantially exceeds the value of the building as a 50 unit apartment
building. Ask Mr. Wilson about
the Park Fleur Apartment building. The
increased taxable value may more than offset the residential rollback.
Roger K. Brown, Assistant City Attorney
City of Des Moines - Legal Department
400 Robert D. Ray Drive
Des Moines, IA 50309
515/283-4541
RKBrown@dmgov.org<mailto:RKBrown@dmgov.org>
________________________________
From: realestate-owner@iabar.org
[realestate-owner@iabar.org] On
Behalf Of Jonathan Wilson [JonathanWilson@davisbrownlaw.com]
Sent: Friday, July 25, 2008 1:15 PM
To: Cynthia Hanna Castelletti; realestate@iabar.org
Subject: Re: Condo
If the client contemplates selling condo units, what you're
describing won't work.
The client could convert to condo ownership of an apartment
project (assuming the property satisfies current building code standards -- see
code section 499B.20, which is probably unconstitutional but is the law until
changed or so declared by a court), retain ownership of all units and (1)
effectively eliminate an association for all practical purposes --i.e., the
client would be meeting with himself -- the building occupants would not be
involved; (2) turn all the occupants into tenants of the owner of the units
(rights and liabilities between then would continue to be governed by 562A). The singular owner of all units would
also own 100% of the common elements -- i.e., the cumulative total of all the
undivided unit ownership interests. The
total value of the apartment building might increase based on FMV of the condo
units collectively (as contrasted with the existing FMV of the building),
potentially offset in whole (or more) by the reclassification of the property
to residential (with resulting RE tax roll back) rather than commercial.
Jonathan
Davis, Brown, Koehn, Shors & Roberts, P.C.
Jonathan C. Wilson
DavisBrown Tower
215 10th Street, Suite 1300
Des Moines, Iowa 50309
phone: 515-288-2500
fax: 515-243-0654
web: http://www.DavisBrownLaw.com<http://www.davisbrownlaw.com/>
e-mail: JonathanWilson@DavisBrownLaw.com
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"Cynthia Hanna Castelletti" <channa@elderkinpirnie.com> 7/25/2008 12:34 PM >>>
One of my colleagues posed the following question:
We have a client who is interested in developing a condo but
wants to retain ownership of all the common areas and also retain ownership of
the structure by not having a condo association. Has anyone ever done that before? If
so, what have been the disadvantages, if any? Any thoughts would be
appreciated.
Cindy Castelletti
Cynthia Hanna Castelletti
Elderkin & Pirnie, P.L.C.
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