Taxpayer Services Division
Management Services to Condominium Associations
This Bulletin is obsoleted by AN 94(4)
Questions have arisen about whether the services property managers provide to condominium associations are taxable. Services rendered to associations, including the common grounds, are not taxable if the complex is entirely owner occupied. When some of the units are leased or rented the services are taxable to the degree to which the units are not owner occupied.
The services typically rendered to the associations by managers or third parties include maintenance of commonly owned buildings and grounds, landscaping, snow removal, refuse disposal, and the record keeping associated with the collection and disbursement of the condominium fees.
When real estate management services are rendered by property managers to condominium associations, the services are not being rendered to a business entity. A condominium association is not engaged in a business. It merely acts on behalf of the unit-owners to preserve the common grounds and to enforce its rules and by-laws. These services remain taxable when rendered to commercial businesses.
If the property manager engages a third party to render to the condominium association the services which the manager is contractually required to render to the condominium association, the property manager may be entitled to issue a resale certificate to the third party. A property manager may issue a resale certificate for these services only in those cases where the services are being resold. The property manager would then charge tax based on the percentage of non-owner occupied units.
If the property manager enters into a contract with a tax district, services rendered under the contract by the property manager are exempt from sales and use taxes, because the tax district is a Connecticut political subdivision.
This bulletin reflects the revision of policy promulgated by Commissioner Timothy F. Bannon in March 1988.
Claims for refund will be allowed, if timely filed and supported by relevant proof. Where the claim pertains to taxes paid as the result of an audit assessment, the claim must be filed within six months after the assessment became final. In the case that no audit assessment was made, the claim must be filed within three years from the last day of the month succeeding the period for which the taxes were overpaid. The claimant shall furnish proof that the amount of refunded taxes will be paid over to condominium associations.
12-407 (2) (i) (I) & (J)