Homeowners’ share of keeping the community by the pool, landscaping, fitness center and security is arranged through HOA fees which property owners make regularly. You will probably see these charges in condos, gated neighborhoods and planned areas. Many people who own houses or invest in real estate ask Are Hoa Fees Tax Deductible.
Familiarizing yourself with HOA Fees
HOA fees are payments that are required to keep community facilities in good shape and running. The fee may pay for the community’s upkeep, common area insurance, a savings account and utilities on occasion. Still, while filing taxes, you should find out if these expenses are deductible.
Do Homeowners Have the Chance to Reduce Taxes Using HOA Fees?
For the most part, payment of HOA fees is not a tax deduction for homeowners. When you live in a house as your main home, the IRS rules do not let you write off HOA fees when calculating your federal taxes. The reason is that residents treat these fees as personal outlays and not as expenses for their business or investments.
When Can You Deduct Fees from Your HOA?
In certain cases, you can deduct HOA fees when filing your taxes.
- If your property is rental property, the HOA fees help maintain your rental and you can deduct those expenses on your Schedule E tax form. You can rent a home temporarily for vacations or for longer spaces of time with leasing.
- If you work from home as a self-employed, you may deduct costs for your HOA fees based on the area in your house used for business.
- If your second property exists just to earn money, usually HOA fees are deemed an allowable expense when you file your taxes.
Is payment of Association Fees Tax Deducted?
People tend to use both “association fees” and “HOA fees” when referring to the same thing. The taxes involved are the same. You can only use association fees as a tax deduction when they are spent on activities that earn income such as renting out property.
Is It Possible to Write off Home Association Fees for Taxes?
Homeowners should remember that taxes do not allow them to deduct their home association fees for their own homes. Still, if these fees are linked to rental property, they can be deducted using the guidelines set by the IRS on taxes.
Final Thoughts
Although many homeowners may find it discouraging that HOA fees are not tax deductible for their main houses, knowing the details is necessary. You can often use these expenses to lessen your tax burden when you use your property as a rental or in business. Save all records of the tax money you pay and get expert advice from a tax professional to guarantee you don’t miss any benefits available under the IRS rules.
