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Do HOAs and Condo Associations Pay Taxes?

Posted on Fri, Feb 13, 2009 @ 05:35 AM
  
  
  
  
  
  
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An important aspect of HOA finances is tax liability. Generally, HOAs are exempt from state and federal income taxes if:

  • Most of its HOA units are used by individuals as residences
  • It's organized and operated to buy, build, manage, maintain, and care for HOA property
  • At least 60% of its gross income for the taxable year comes from HOA membership dues, fees, or assessments
  • None of the HOA's net earnings or income goes to any individual, except if it's by a rebate of excess membership dues, fees, or assessments, for example

State and federal law require the HOAs and Condo Assocations to make an election to be treated as a tax-exempt organization. Also, even if the HOA is tax exempt, it must file a federal tax return.

The tax exemption excludes from the HOA's gross income all of the membership dues, fees, or assessments collected by the HOA. In addition, the HOA gets an automatic $100 deduction on its gross income. Essentially, then, a tax-exempt HOA is taxed only on its investment income, if it has any, and any other income it might have, such as from renting out a recreational facility to non-member/owners, less the $100 deduction.

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Comments

Should money received from a bank loan to a Condominium Association be included in the Condominium's current year gross income for income tax purposes?
Posted @ Sunday, July 19, 2009 7:32 PM by William C. Skutt
Are monies received from a bank loan in the current year included in gross income on the current year's income tax return (form 1120-H)?
Posted @ Monday, July 27, 2009 3:50 PM by Bill Skutt
Our condo association is only 2 yrs old. I was just elected president for the 2010 year and have to file our taxes for 2009. The previous president said that all she did for the 2008 tax year is copy the 2007 tax form completed by the developer for the previous year. I know this can't be right. In addition to the tax form, is there a document from the govt or from our bank account that I should reference in completing the form? Or is it just looking at our Dec. 2009 bank statement? We are a 6-unit condo, self-managed. All of our assessments are used to pay standard costs - garbage pick up, snow removal, etc.
Posted @ Friday, February 12, 2010 10:33 AM by Barbara Bouie-Scott
Our homeowners association has been in existence since early 1990 and has not filed a return. I would like to file the returns for all the years that I can find the information for. Is that advisable or should we just file for the last 10 years or something in line with the statute of limitations for the returns
Posted @ Tuesday, February 01, 2011 7:37 PM by HOA HOA
We, too, are a small HOA and qualify for tax Exempt status as a Non-Profit. I heard that Non-Profits now must file a form with the IRS. We hadn't previously since I was told we wouldn't need to. Do we only need to file the one form to register us with the IRS?  
 
Posted @ Monday, February 14, 2011 5:10 PM by Susan
Being new to the blog area, can someone please tell me where I can post a condo related question? Is there a specific website?
Posted @ Tuesday, April 05, 2011 7:49 AM by D Bares
In 2010, my condo HOA contracted to have new roofs installed on each building. Based on paying HOA fees (reserves), can the board prorate the cost of materials/supplies, divide it by the number of units, and each unit can deduct the expense as a capital improvment on their tax return?
Posted @ Monday, April 11, 2011 12:31 PM by Alfred
I am in Illinois, and when a new board took, that was one the concerns they had; one the the board members called and wrote to the IRS and gave them a few facts about our concerns; we were told we do not have to file taxes as we do not have any one working for us, 60% of our assessments go to taking care of out association, we do meet requirements for exemptions.
Posted @ Saturday, April 16, 2011 7:35 PM by sofia
If our association received a sizable check from BP due to a claim we submitted for lost income the association incurred from reduced parking fees...is this considered to be taxable income? We are located in Orange Beach, Alabama
Posted @ Saturday, May 07, 2011 11:11 AM by gordon smith
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Posted @ Friday, June 17, 2011 3:33 AM by baixueyi
If a Condominium Association in Florida forecloses on a condo unit and buys it back and rents it out, is the Association required to pay sales tax?
Posted @ Thursday, July 14, 2011 1:02 PM by Sue
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Posted @ Monday, July 18, 2011 2:38 AM by North Face Clearance
CAN AND SHOULD A CONDO OWNER ASK THE IRS TO INVESTIGATE A HOA. SINCE THE HOA WANT SHARE INFORMATION
Posted @ Wednesday, July 20, 2011 8:47 AM by CAROLYN
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Posted @ Friday, September 02, 2011 2:13 AM by cheap beats by dre
Should an incorporated 501-C(4)HOA have a tax exemption certificate to use when purchasing goods for the association?
Posted @ Sunday, September 18, 2011 10:56 AM by pen
I recently purchased a condo in CA and became the HOA president only to find that the association has not been filing state and fed tax returns or the statement of common interest to the SOS office. The status of the corporation is suspended. The CC&R states it a non profit Corporation but I doubt anyone has filed for the state or fed tax exempt status. The association is under reserved and the property has been under maintained so the available reserves are already earmarked for maintenance. Has anyone else gone through the process of reviving a CA HOA corporation? What types of fines are there for not filing with the SOS. Are there minimum tax fees for CA state? What is the statute of limitations on state returns, 7 years like the fed?
Posted @ Friday, September 30, 2011 10:39 AM by MMCHOA
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