By Ward Hanigan
In many cities, whenever the title of an improved parcel of real property is changed from an individual’s name to an entity-type name (i.e. a trust, or partnership, or an LLC, etc.) the city will presume that the property is being rented and thus will want to collect a rental unit business tax.
However, if the property owner can show that he is an owner-occupant of the residence, it will qualify for an exemption from such a business tax.
Some other exemption categories are that the property is a vacation/second home, or is occupied by an immediate family member, or is occupied by the beneficiary of the trust that’s on title, or it’s rented to a Section 8 tenant, or that it’s rented to a tax-exempt organization, etc.
Usually you will have to re-submit your exemption certificate every year or so. Failure to do so will strip you of your exemption. Failure to pay any non-exempt tax will result in a monetary penalty. If you ignore that situation the city will slap a lien against the property, forcing you to ultimately pay the tax and penalties under the threat of a foreclosure.
Frequently the city will mail their tax notices to the trustee or entity that’s in control, as shown in the public record. So, if that’s your arrangement, make sure to clue-in your stand-in representative to promptly forward to you any and all such notices.
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