When it comes time for tax season, many people look for anything and everything they can deduct so they can get the best possible refund or minimize the amount they owe—especially if they’re self-employed! Many people wonder if the fees paid to their HOA management service in Chandler, AZ can be deducted on their taxes. Read on for the run down on how this works.
Are HOA dues tax deductible for homeowners?
The simple answer to this question is no. Unfortunately, dues paid to the HOA by individual homeowners are not tax deductible.
There are many ways that the IRS provides tax deductions to homeowners for tax benefits. Homeowners can deduct their mortgage interest, real estate taxes and other itemized deductions. However, if you work from home and are self-employed, you can deduct a portion of your expenses and bills (including a portion of the HOA fees) for your home office.
You’ll need to figure out what square footage in your home is reserved for business use and deduct that proportion of the HOA fees and other bills. Otherwise, dues paid to your HOA in Chandler, AZ are not approved deductions.
Are HOA dues tax deductible for renters?
Those who are renting their property to others, on the other hand, can deduct their HOA assessment as an expense, because it is necessary to maintain the property and fees are considered a business expense. You’ll use the Schedule E tax form and write the HOA assessment fees under rental property maintenance.
However, if you sometimes live in the rental property yourself at certain times of the year, you can only deduct HOA fees for the proportion of time that you are not occupying the property.
Tax deductions for the HOA
If you’re part of an HOA in Chandler, AZ, you may be wondering if your organization is exempt from taxes. While they don’t fall under the definition of a 501(c) nonprofit, they can receive other tax benefits, as defined by the Form 1120-H Tax Return for a Homeowners Association.
Whoever is filing taxes for your HOA will need to make sure that they fall under all five elements of the definition in order to file the Form 1120-H for the year. Consult your accountant for more information on the tax benefits of filing as an HOA.
If you’re in need of an HOA consultant in Chandler, AZ, consider Tru-Star Management Solutions, LLC. Whether you live in a condominium association, single-family community or master-planned community, we have the tools, technology and expertise that produce tangible results. Our passion for this industry and personal care for our clients is evidenced by the exceptional customer service we provide.
In order to deliver the best service experience in the industry, we only employ tenured and experienced management professionals who share in our passion, care and vision—those who have made community management a career. You can expect more stability, more knowledge, more professionalism and much less manager turnover with our HOA management company in Chandler, AZ.