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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2829
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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Are air right subject to capital gain? In a condominium- who

Customer Question

Are air right subject to capital gain?
In a condominium- who can sell the air rights the owners of each unit or the association?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

The sell of "air rights" would be the same as an easement on real property by the owner of the property .
Rev. Rul. 71-286, 1971-2 C.B. 263, considers whether air rights over real property are considered “interests in real property” and “real estate assets” within the meaning of section 856(c).

The term “air rights” is defined as the long-term leasehold or fee simple ownership of the space above the ground that a landowner can occupy or use in connection with the land, plus necessary easements on the surface for support of structures erected in such air space. The revenue ruling holds that such air rights are considered “interests in real property” and “real estate assets” within the meaning of section 856(c).

A condominium is described as “the concept of ownership of a single unit of air space within a multiple dwelling complex, together with joint ownership of the amenities (pool, recreation center, greenbelts, etc.) and common areas of the structures and land among all unit owners.

If the unit owner has limited right to common areas then the association would be allowed to sale and not the unit owner.

Customer: replied 1 year ago.
Are they subject to Capital gain rate?
Who is the one who have the right to sell, each individual owner of the complex? or the association? They have to obtain approval of every single owner.
Expert:  Robin D. replied 1 year ago.

Yes they would be. The sell of an asset is subject to Capital Gains.

As I explained in my original answer, the owner has the right to sell. The ownership would depend on the original agreement with the association and the unit owner.

As this is common ground territory it is most likely the association would be the owner but you should have an attorney look over the original agreement when the condo was purchased.

Expert:  Robin D. replied 1 year ago.
If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.
Expert:  Barbara replied 1 year ago.
Different expert here - My name is ***** ***** please allow me to provide you with clarification.
The easiest and most reliable way to determine if you own the air rights above a condominium you own is to look at your deed. The deed will specifically include the fact that you own the air rights--similar to when an owner of a property located near a body of water has riparian rights specifically listed in the deed.
If the air rights were assigned to each individual unit owner after purchase, an appropriate Assignment would be recorded in the public records.
As mentioned above, the owner will owe any capital gains tax that may be due on the sale.
Please let me know if you require further information or clarification.
Thank you and best regards,
Barb

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