Drew Edmundson wrote:

- quote -

Agreed. But, for some reason, the "co-op" form of ownership
never caught on here in WA state. I've heard of a few of
them, but it is pretty rare. On the other hand,
"condominiums" are quite common around here.

- quote -

Agreed. For clarification, I am NOT suggesting that the
condo dues can be deducted as taxes. I am suggesting that if
the condo association pays taxes for which YOU (or your
property) are liable, you can deduct those amounts as taxes.

MTW

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Drew Edmundson <drewsbeagles[at]hotmail.com> wrote:
- quote -

To follow up myself, cooperatives are covered under IRC
Section 216. So if your condominium qualifies under 216 as
a cooperative corporation then you should be ok.

Publication 17 specifically states that "Homeowners
association charges" are not deductible as real estate
taxes. See page 161. (Disclaimer: a publication is not
citeable as law).

--
Drew Edmundson

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Arthur L. Rubin wrote:

- quote -

The practical answer is that unless the HOA pays expenses
that are potentially deductible by the homeowners (interest
and taxes), the issue is "moot."

As I recall, there are a handful of rulings on this issue,
some favorable, some not. The issue appears to turn on the
degree to which the homeowners (or their units) are
individually liable for the expenses, so this ultimately
depends on the ever-popular "facts and circumstances."

In the three examples that I posted previously, there is no
question (in the first two, at least) that the individual
homeowners are or would become liable upon the default or
non-performance of the association. The third example
(dealing with landscaping equipment) is probably less clear
because the "lien" for personal property taxes might be
limited to the equipment only, and thereby NOT attach to the
ownership units.

In my prior message I used the term "agency" as a legal term
of art. Therefore, I don't feel obliged to distinguish such
use from the ordinary "dictionary" meaning of the word.
<grin
MTW

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MTW wrote:
- quote -

I can't speak for the "typical" case, but our HOA files a
specialized 990. If any expenses could be deducted by the
homeowners, the instructions for that 990 would likely
specify it. Of course, this is an HOA of detached homes,
rather than of a condo, so the rules MIGHT be different.

Furthermore, your argument could also be used for taxes and
special assessments by a government (county in California).
Isn't the government supposed to be an agent of the people?

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"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote:
- quote -

I think Mike is confusing the Coop rules with the
Homeowner's Association rules. Coops do pass this through
to their owners but HOA don't.

--
Drew Edmundson

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Arthur L. Rubin wrote:

- quote -

I'm not sure whether "pass-thru" entity is the correct term.
But, in the typical case, a HOA is simply acting as an
"agent" for the homeowners. It collects money from them to
pay common expenses. If the HOA fails to pay the vendors in
question, they have full recourse against the homeowners.
The HOA itself really has very little "legal capacity"
except as a representative of the owners.

So, in this case, it seems to me that expenses paid by the
HOA out of money that I (as an owner) give them are no
different than expenses paid directly by me.

Examples I've seen include:

1) A condo association purchased one of the apartments for
use by a resident manager. Technically, this apartment was
NOT part of the "common area" because the declaration was
not amended to define it as such. So, the county billed the
association (rather than the individual owners, as was the
case with "common area") for the property taxes on this
unit. In my opinion, the individual owners would be entitled
to a tax deduction for their allocated share of this
expense. Also, in my opinion, the homeowners would be
entitled to capitalize (add to their basis) the "special
assessment" that was invoked to raise money for this
purchase in the first place.

2) A condo consisted of three buildings. One was destroyed
by fire. During the reconstruction period, the condo
association took out a series of construction loans. In my
opinion, the individual homeowners would be entitled to an
interest deduction for their allocated share of this expense
(subject, of course, to rules associated with mortgage or
investment interest).

3) A large condo association owned several pieces of
landscaping and maintenance equipment (tractors, movers,
trucks, etc.). These items were NOT licensed for use on
public roads and therefore were subject to a county personal
property tax, paid by the association. In my opinion, the
individual homeowners were entitled to a deduction for their
allocated share of these taxes (although the amounts at the
individual level were fairly de minimus).

MTW

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Seth Breidbart wrote:
- quote -

Perhaps, if the HOA was organized as an unincorporated
association and treated as a partnership for tax purposes.
However, they are usually corporations (at least around
here).

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Arthur L. Rubin wrote:
- quote -

In my state, they are considered PRIVATE corporations.

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Seth Breidbart wrote:
- quote -

Glad this discussion came up. We pay 25$ per year for
recreation association dues, out of which the common
property taxes on ten acres is paid. Looks like maybe a
one or two dollar deduction for everybody.

Now, to get the treasurer to send out appropriate statements.

ChEAr$,
Harlan Lunsford, EA n LA
Fri, 10 Dec 2004 22:40:54

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MTW wrote:
- quote -

Can you give an example of how that might be? I didn't
think an HOA could be a pass-through entity?

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Orange Juice <orangetrader[at]hotmail.com> wrote:

- quote -

If part of the HOA's expenses are real estate taxes on the
common property (e.g. swimming pool, clubhouse), can the
benefit of paying those taxes be passed along to the home
owners?

Seth

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Orange Juice wrote:

- quote -

As others have noted, HOA fees are generally nondeductible
unless incurred with respect to a rental property.

However, it is very occasionally possible that the HOA fee
~might~ include certain interest and taxes paid by the
association that ~might~ be deductible individually by the
homeowners. In that case, the association should advise you
of the amounts. But, this is a rare occurrence in my
experience.

MTW

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D. Stussy wrote:

- quote -

Actually, an HOA may be a governmental entity. The tax is
still not based on value, and hence not a deductible
proerty tax.

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Orange Juice wrote:

- quote -

For your personal residence with NO business use, no.

They are deductible on Schedule E for rented property.
They are deductible on Form 8829 as an indirect (i.e.
prorated) expense for business use of home (home office or
storage of inventory).

- quote -

It's not a property tax because it's not levied by a
GOVERNMENTAL entity.

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Orange Juice wrote:
- quote -

Only for a rental or business use.

- quote -

Even if it is billed as "property tax", only value-based
taxes are deductible as "property tax" on schedule A.
Per-parcel and acreage taxes are not deductible.

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"Orange Juice" <orangetrader[at]hotmail.com> wrote:

- quote -

No.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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orangetrader[at]hotmail.com (Orange Juice) writes:

- quote -

Not for your personal use property. They are a valid
deduction against rental income.

- quote -

Not really. Lots of jurisdictions bill such things as water
& sewer with the property taxes, but that doesn't make that
part deductible.

Phil Marti
Clarksburg, MD

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If you have to pay for Home Owners Association Fees, can
this amount be deductible in any way shape or form?

I know an area near us, their HOA fees are included as an
additional "property tax" which allows for some savings.
But if it is not part of property tax is it still possible
to make any claim or deduction?

Thanks and Regards,

O

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