Are HOA Fees Tax Deductible?
As Home Owner Association members, we have all come to a point in our life when we worry about our expenses getting too high. You take it upon yourself not only to handle the cost of the house you pay for, but also to participate in the community’s welfare. However, with the proper knowledge, research, and tax deductibility, there is a way for you to benefit from HOA fees and tax deductions.
It’s tax season again, and everyone wants to deduct every dime possible. There are plenty things that are tax-deductible, but did you know that HOA fees may also be deductible? Though each HOA is different, members generally pay fees or dues that go toward bettering the community (such as landscaping, swimming pool, clubhouse, etc.). While they are not completely tax-deductible, you can at least claim a portion of them.
HOA Deductibility Qualifications
If you are a first-time homeowner and it is your place of residence, your HOA fees are generally not tax deductible. However, there certain circumstances that qualify your HOA fees for tax deductibility:
- HOA Dues on Home: If your HOA dues go to something that would have been deductible had you paid it yourself, then they are deductible. Hypothetically, say your HOA owns the land surrounding a building you have in development. The HOA is obligated to pay taxes on the land, and you would be able to deduct your portion of the dues that relate to the property tax in addition to deductions you claim on your unit or home.
- Rent Out Your Home: If you rent out your home, even if you only do it certain times of the year, you can claim your HOA tax deduction. However, only a portion of the costs is claimable, which can is calculated by relating the percentage of time it was rented out to the time you lived in it.
- Own a Home Office: If you own a home office, you can write off a portion of the home expenses that relate to your office’s total area. For example, if your office took up 20 percent of your home’s space, you could write off 20 percent of everything you spend on your house (repairs, utility bills, services, etc.)
- HOA Fees on Investment Properties: Whereas HOA dues on your home are subject to stipulations, HOA dues on investment property can be completely written off. This is because you get to write off all of the expenses associated with managing the property, including HOA dues.
National Property Management Group in Santa Clarita offers services for both HOA boards and the residential homeowner. If you are in need of property management services, have questions about your fees, or would just like some information about how to get the most out of your HOA and it’s benefits, then give us a call today.
National Property Management Group
25115 Avenue Stanford A300
Valencia, CA 91355