[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.528-3]

[Page 236-237]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.528-3  Association property.

    (a) Property owned by the organization. Association property 
includes real and personal property owned by the organization or owned 
as tenants in common by the members of the organization. Such property 
must be available for the common benefit of all members of the 
organization and must be of a nature that tends to enhance the 
beneficial enjoyment of the private residences by their owners. If two 
or more facilities or items of property of a similar nature are owned by 
a homeowners association, and if the use of any particular facility or 
item is restricted to fewer than all association members, such 
facilities or items neverthelesswill be considered association property 
if all association members are treated equitably and have similar rights 
with respect to comparable items or facilities. Among the types of 
property that ordinarily will be considered association property are 
swimming pools and tennis courts. On the other hand, facilities or areas 
set aside for the use of nonmembers, or in fact used primarily by 
nonmembers, are not association property for the purposes of this 
section. For example, property owned by an organization for the purpose 
of leasing it to groups consisting primarily of nonmembers to be used as 
a meeting place or a retreat will not be considered association 
property.
    (b) Property normally owned by a governmental unit. Association 
property also includes areas and facilities traditionally recognized and 
accepted as being of direct governmental concern in the exercise of the 
powers and duties entrusted to governments to regulate

[[Page 237]]

community health, safety and welfare. Such areas and facilities would 
normally include roadways, parklands, sidewalks, streetlights and 
firehouses. Property described in this paragraph will be considered 
association property regardless of whether it is owned by the 
organization itself, by its members as tenants in common or by a 
governmental unit and used for the benefit of the residents of such unit 
including the members of the organization.
    (c) Privately owned property. Association property may also include 
property owned privately by members of the organization. However, to be 
so included the condition of such property must affect the overall 
appearance or structure of the residential units which make up the 
organization. Such property may include the exterior walls and roofs of 
privately owned residences as well as the lawn and shrubbery on 
privately owned land and any other privately owned property the 
appearance of which may directly affect the appearance of the entire 
organization. However, privately owned property will not be considered 
association property unless:
    (1) There is a covenant or similar requirement relating to exterior 
appearance or maintenance that applies on the same basis to all such 
property (or to a reasonable classification of such property);
    (2) There is a pro rata mandatory assessment (at least once a year) 
on all members of the association for maintaining such property; and
    (3) Membership in the organization is a condition of ownership of 
such property.

[T.D. 7692, 45 FR 26321, Apr. 18, 1980]