Homeowners Association 
Tax Services

Homeowner association (HOA) taxes present a unique complexity that sets them apart from individual tax returns or those of small businesses. The distinct nature of HOA taxation lies in the option for HOAs to elect to be taxed only on their non-exempt function income, provided they meet certain conditions. This effectively means that the majority of the income received from HOA members, such as dues assessments and special assessments, is typically not subject to taxation. However, other types of income, like interest received from banks or rental income from external sources, are taxable.

 

The intricacies of HOA taxation highlight the importance of filing complete and accurate tax returns. By doing so, HOAs can maximize the tax benefits available to them, which can significantly impact their financial health. Properly filed returns ensure that the association only pays tax on income that doesn't fall under their exempt function, thereby taking full advantage of the tax provisions specific to homeowner associations.

 

HOAS must be aware of and comply with these tax regulations to avoid penalties. The penalties for non-compliance or inaccurate filing can be substantial, and they can negate the potential financial benefits that proper taxation could bring. This makes it essential for HOAs to seek knowledgeable tax professionals who understand the nuances of HOA tax law, ensuring that they file their returns accurately and benefit from the specific tax provisions available to them.