Opinion ID: 3171459
Heading Depth: 1
Heading Rank: 3

Heading: Taxation of the Ownership Interests

Text: ¶ 19. We finally address taxpayer’s third argument, which is that the trial court erred by upholding Sudbury’s apportionment of the tax burden among the unit owners in relation to their percentage interest in Wanee. He contends that this method is unreasonable and therefore violates both the Fourteenth Amendment and the Proportional Contribution Clause. He further contends that this method does not reflect the actual value that the common property adds to each unit and therefore violates the principal that property tax appraisal value should be proportionate to fair market value. In place of this method for apportioning the tax burden, taxpayer proposes that the tax burden arising from the common property in Sudbury should fall equally on each unit. ¶ 20. We disagree. Sudbury’s method of apportioning the tax burden according to ownership interest rather than equally to each unit is reasonable because it takes into account the benefits and burdens of condominium ownership. It comports with the fair market value principle of the Proportional Contribution Clause for the same reason; it reflects the actual value that the common property adds to each unit. Under Vermont law, common expenses in a condominium are charged according to the unit owners’ interests in the common area. See 27 V.S.A. § 1310 (“[T]he common expenses shall be charged to[] the apartment or site owners according to the percentage of the undivided interest in the common areas and facilities.”). This burden is balanced by the actual benefit of having an ownership interest. Upon termination of the condominium, the unit owners gain an interest in the property owned in common according to their previous ownership interest of the condominium. See 27 V.S.A. § 1316 (“[T]he property shall be considered to be owned in common by the apartment or site owners. The undivided 11 interest in the property owned in common which shall appertain to each apartment or site owner shall be the percentage of undivided interest previously owned by the owner in the common areas and facilities.”). Tax is a common expense, so it is reasonable for Sudbury to allocate this burden across the different units according to percentage of ownership interest. It is therefore consistent with the Fourteenth Amendment and the Proportional Contribution Clause. ¶ 21. This allocation also reflects the historical and prevalent practice in Vermont. In our state, the common area of a condominium community is not taxed as if it is completely independent of the units that own easements to it. Rather, it is allocated to the individually owned units that comprise the condominium, and then those units are taxed. This principle is explained in 27 V.S.A. § 1322, which reads, in part: Each apartment or site and its percentage of undivided interest in the common areas and facilities shall be considered to be a parcel and shall be subject to separate assessment and taxation by each assessing unit and special district for all types of taxes authorized by law . . . . Neither the building, the property nor any of the common areas and facilities shall be deemed to be a parcel. 27 V.S.A. § 1322. This practice is well established in our state, and condominium owners like those in Wanee have advance notice of it. We further note that, despite taxpayer’s argument to the contrary, Sudbury’s method comports with § 1322. The statute prohibits taxing common areas as a separate parcel only if those common areas lie in the same town as the community’s units. It does not prohibit taxing common areas that lie in a wholly separate town from the units. Here, none of Wanee’s units lie within Sudbury, so Sudbury may tax the portion of common area lying within its boundaries. Affirmed. FOR THE COURT: