A single tax colony is a community where residents own their homes but lease the land underneath from a nonprofit corporation or land trust that holds title permanently. Each leaseholder pays an annual ground rent based on the value of the land alone. That rent covers the property taxes owed on the whole tract, and whatever’s left funds local roads, sidewalks, and other improvements. The model comes from economist Henry George, and only two functioning examples remain in the United States: the Fairhope Single Tax Corporation in Alabama, founded in 1904, and the Village of Arden in Delaware, founded in 1900.
The Idea Behind It
Henry George’s 1879 book Progress and Poverty argued that when a piece of land rises in value, the increase usually has nothing to do with what the owner did. Roads get built, schools open, population grows, and the ground becomes more desirable. George called that rising value the “unearned increment” and said it belonged to the community that created it. His proposal was to tax land values heavily and leave wages, buildings, and personal property alone. He wasn’t proposing to seize land itself. You only need to capture the rent.
Single tax colonies were built to put that distinction into practice. If you build a house, plant an orchard, or add a second story, that value is yours because you made it. The value of the ground beneath, though, comes from location and surrounding activity, so the colony captures it through ground rent and spends it on the community.
How the Leasehold and Ground Rent Work
The structure separates land from everything on top of it. Residents own the house, the garage, the fences, and any other improvements outright. They never own the dirt. Instead, each leaseholder signs a long-term lease, typically running ninety-nine years, that renews on transfer to a new owner.1Henry George School of Social Science. Material about Single Tax Colonies
The annual ground rent is calculated from the assessed value of the land alone. Buildings, landscaping, and other improvements are excluded. Renovate a kitchen or add a second story and your ground rent doesn’t move. The incentive runs opposite to conventional property tax: you’re rewarded for improving your lot and penalized for sitting on valuable land and doing nothing with it.
The colony entity collects all the ground rent, uses it to pay state and county property taxes on the entire tract (land and improvements combined), and puts the remainder into a community fund for local infrastructure.2Fairhope Single Tax Corporation. Fairhope Single Tax Corporation Sustained by Supreme Court From the resident’s side, that’s one payment to the colony rather than separate bills from county and municipal tax offices.
Who Sets the Rent and Runs the Colony
Because no individual can ever acquire fee simple ownership of the ground without breaking the model, a permanent legal entity holds title. In Fairhope, that’s a nonprofit corporation. In Arden, it’s a combination of a land trust for leased residential lots and the village municipality for common greens and woods.
Arden governs through a Town Assembly where every resident gets one vote. The Assembly meets quarterly and needs a quorum of thirty-five to conduct business. Ordinances must be read at two consecutive meetings before a vote. A Board of Assessors determines the rental value of leased land each year, holds hearings in May and June, and reports its rate to the Assembly. A leaseholder who disagrees can appeal to the full Assembly, and if two-thirds support an alternative rate, both rates go to a village-wide referendum.3Delaware Town Charters. Arden Charter The Budget Committee prepares an annual spending plan for ground rent revenue, which the Assembly must approve and voters ratify before it takes effect.
Fairhope works differently. An elected board manages roughly 4,500 acres in and around the city. The corporation exists alongside the City of Fairhope, which was incorporated separately in 1908 and has its own mayor and council. Residents on colony land pay ground rent to the corporation and are also governed by city ordinances like anyone else in town.
Where Single Tax Colonies Still Exist
Fairhope, Alabama
The Fairhope Single Tax Corporation still holds about 4,500 acres, roughly 20 percent of the land in and around the city. Leaseholders sign ninety-nine-year leases and own all improvements on their lots. The rent covers property taxes on land and improvements, an administration fee, and what the corporation calls a “demonstration fee” calculated from the appraised land value. The city has grown well beyond the corporation’s holdings, so most Fairhope property owners today are conventional fee simple owners with no connection to the single tax system.
Arden, Delaware
Arden sits on about 163 acres with a population near 430. It’s one of three adjacent villages known as “the Ardens,” alongside Ardentown and Ardencroft, each with its own municipal charter. It was founded in 1900 as both a single tax experiment and an arts-and-crafts community influenced by William Morris. Ground rents cover village, county, and local school expenses and are assessed based on each leasehold’s square footage.4Village of Arden, Delaware. Welcome to the Village of Arden, Delaware As of 2026, the village is amending its charter through state legislation and updating ordinances on accessory dwelling units and assessor procedures.
Colonies That Didn’t Last
Several other single tax communities were founded in the late 1800s and early 1900s. Free Acres in New Jersey, a seventy-five-acre community founded in 1910, operated as a collective landholding with monthly community meetings but had largely dissolved as a Georgist experiment by the 1990s. Other early experiments abandoned the model, were absorbed into surrounding municipalities, or converted to conventional ownership.
Buying, Selling, and Financing a Home in a Colony
When you buy a home in a single tax colony, you’re purchasing the building and receiving an assignment of the existing land lease. You are not buying real estate in the conventional sense. The colony issues a new ninety-nine-year lease to the buyer at transfer. In Fairhope, both buyer and seller go through the corporation’s transfer process, and buyers must attend an orientation session before closing. That can create timing complications if you want to close quickly and no orientation is scheduled.
Financing can be difficult. Because the buyer doesn’t own the land, conventional mortgage lenders sometimes treat leasehold properties differently from fee simple homes. Lenders need to be satisfied that the lease terms protect their collateral, and not all of them are. Buyers in colony communities often work with local banks or credit unions familiar with the leasehold structure rather than national servicers.
When you sell, the price depends on the improvements you’ve made and the location, but there’s no land equity to cash out. The land was never yours. A lower ground rent relative to property taxes on comparable conventional homes can make colony properties attractive, but the unusual ownership structure narrows the pool of buyers, particularly those who need standard financing.
How the IRS Treats Your Ground Rent
Federal tax treatment turns on whether the lease qualifies as a “redeemable ground rent.” If it does, your payments are deductible as mortgage interest. Under federal law, a ground rent is redeemable when all four of these conditions are met:
- The lease, including renewal periods, runs for more than fifteen years.
- You can freely assign the lease without the lessor’s consent.
- You have a present or future right under state or local law to terminate the lease and buy the lessor’s entire interest in the land for a set price.
- The lessor’s interest in the land is primarily a security interest protecting the right to rental payments.
The third condition is where most colony leases fail. Single tax colonies are specifically designed so that leaseholders never acquire the underlying land. If state or local law doesn’t give you the right to buy the land outright, the ground rent isn’t redeemable under the statute and can’t be deducted as mortgage interest.5Office of the Law Revision Counsel. 26 USC 1055 – Redeemable Ground Rents
When the ground rent doesn’t qualify as redeemable, it’s simply rent, and personal rent isn’t deductible on a federal return. If part of the property is used for business, the rent attributable to that use may be deductible as a business expense. The IRS also notes that nonredeemable ground rents can sometimes be deductible as real estate taxes when the rent functions as a tax based on assessed value and the leaseholder is obligated to pay it, though the mechanics of colony ground rent don’t always fit that category cleanly.6Internal Revenue Service. Publication 530, Tax Information for Homeowners Before buying into a colony, talk to a tax professional about how your specific ground rent will be treated.
Practical Limits and Criticisms
The land-only appraisal at the heart of the model is inherently subjective. Separating the value of a location from the value of what sits on it requires judgment calls that residents can and do dispute, which is why both surviving colonies build formal appeal processes into their assessments. Colony governance also depends on sustained participation from a small community, and volunteer fatigue is a real risk for organizations doing quasi-governmental work.
The financial promise has limits too. Because the colony pays property taxes on the entire tract, including improvements, the pitch that “you only pay for the land” doesn’t mean the colony’s own costs are unaffected by what residents build. And critics have argued from the beginning that a colony of a few hundred leaseholders surrounded by a conventional real estate market can’t really prove anything about the single tax as public policy. A 1905 review of Fairhope called it a “closed corporation” run along “autocratic lines” rather than a genuine test of George’s principles. That tension between private experiment and public proof has never fully resolved.
Even so, both surviving colonies have lasted well over a century. Arden’s Town Assembly still meets quarterly and updates its ordinances. Fairhope’s corporation still manages thousands of acres inside a growing city. For a prospective buyer, the practical questions are the ones to focus on: whether you’re comfortable never owning the land, whether you can find a lender who understands the lease, and how the ground rent will be treated on your tax return.