Property Tax Post: When Property Taxes Give You a New Roommate

We’ve all heard of split-level houses, but what about split-ownership houses? Involuntary split-ownership. That’s the position a Connecticuter /New Yorker finds herself in, thanks to a property tax flub by her bank.

The woman, whose property sits on the New York/Connecticut state line, had 40 percent of her half-acre property essentially annexed by her neighbor, who bought it at a foreclosure auction, when her bank failed to pay the property taxes on the New York side of her property for 7 years.

Given that property taxes are paid and collected at the county or municipal level, paying property taxes to two separate taxing jurisdictions is not as uncommon of a problem as might be supposed. Properties straddling state borders are less common, however, and having your neighbor buy the foreclosed half of your property is less common still.

A Delaware assessor, in a 1994 Philadelphia Inquirer article, said there were about 15 to 20 houses straddling the Delaware-Pennsylvania border at the time. According to a county budget director who was quoted in the article, there is some state legislation that determines where real property is taxed based on “where you sleep, where the bedroom is.”

Real property in both New York and Connecticut is taxed in the jurisdiction in which it is located, so the woman’s bank or loan-service firm had the responsibility to pay property taxes in both jurisdictions.

The lesson for anybody with property straddling two taxing jurisdictions: If you don’t want an unexpected roommate, make sure your bank knows how to pay taxes.

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Is there an easier way to administer property taxes for properties that straddle state borders?

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