Club House Rental ?

Hello all,
I am curious what the going rate if for clubhouse rentals amongst HOA's ?

We have an genuinely archaic agreement that needs to be revamped and updated.

Our rental is currently $25 with a $200 deposit. I'd like to see ours actually generate a bti of revenue for our HOA.. $25 is a laughable amount.. and 200 hardly covers anything that may be damaged.

Please advise.

I guess I shouldn't say revenue as we are a non profit. I should say money worth collecting.. $25 seems laughably low does it not? $200 deposit hardly covers any damage in the event of that happening.

Do you HAVE a problem with damage?

$75 rent fee. 250 Security Deposit.

That is an over-simplified, uninformed view.

If you look carefully, you will likely find that many of the golf clubs are organized and chartered as corporations that are separate from the HOA. Although they may have the same names, they are often separate entities.

The IRS has very specific rules (26cfr1.258) regarding the sources and types of income and the types of allowed expenses in order for an association to be able to file a Form 1120-H with the preferred tax status of an HOA. A good accountant can't change the rules. In fact, an accountant can be fined and barred from preparing tax returns for knowingly (which includes should have known) violating the IRS rules when preparing tax returns. (The penalties are steep.)

Where HOAs have owned and operated golf clubs there have been news reports of cases where the IRS has charged some HOAs with improperly reporting income as a result of golf club operations.

The fact is, for an HOA that files Form 1120-H, all non-exempt income is taxable at a flat rate of 30%. The HOA is allowed to deduct from that income any expenses directly related to producing that income. Furthermore, there is an upper limit to the gross non-exempt income an HOA can have. If the HOA exceeds that upper limit it loses its preferred tax status as an HOA and can no longer file Form 1120-H but must file Form 1120 as any other corporation. If the non-exempt income is high enough, though, that can sometimes result in a better tax position.

An Hoa could easily dodge any debates over rent profits. I don't think an HOA should seek strategies on profiting on dues payers

I meant to say accountant. Sorry.

We don't have a clubhouse, so I've not dealt with it. But why would one charge anything at all to people who already pay for and own the building?

We have our meetings at the township hall. No charge. We all pay taxes, so we collectively own the building.
They might charge for non-HOA or non-official sorts of things, like if someone wanted a bridal shower there (no clue why someone would do such a thing though).

Definitely not true. Attorneys handle divorce settlements and such settlements always have tax consequences: alimony, division of property, child custody, child support and so forth. I've prepared tax returns for clients who have gotten divorced and some of the divorce settlements have resulted in disastrous tax consequences that could have been avoided.

Fiona,

I'm in the minority of opinion on my HOA board regarding lower rental fees on the clubhouse. Frankly, our place gets used bi-monthly and it gets a bit "stale" from lack of activity in my opinion, like a building that sits there, ready for use, but not used quite enough. Musty. Hour-long HOA meetings, two days per month isn't enough usage for the expense we put into it to maintain it.

if you rent a facility to a member of the general public it becomes a 'public accomodation' and subject to the ADA

PERIOD

I think what I have read Melissa.. is that it does fall under ADA if rented to NON MEMBERS which is what our HOA has always done..

I emailed our property manager and asked to get this clarified.

It was enough to stunt the manager. They don't know! So off to research they go.. Better to make sure of this one way or another.

A shopping mall is privately owned and it is subject to ADA requirements. I owned a store in a small strip mall and I was required to meet ADA requirements. It is not the type of ownership that matters, it's how the facility is used that matters.

According to the US Department of Justice, Civil Rights Division:

"Public accommodations are private entities who own, lease, lease to, or operate facilities such as restaurants, retail stores, hotels, movie theaters, private schools, convention centers, doctors' offices, homeless shelters, transportation depots, zoos, funeral homes, day care centers, and recreation facilities including sports stadiums and fitness clubs."

In other words, if you rent your facilities only to your members, then I agree, you are not subject to ADA. However, once you start renting to the general public you are subject to the ADA, but only with respect to the facility you are renting.

We only rent our clubhouse to our unit owners (members). We do not rent to the general public. Although, it wouldn't matter because our clubhouse is ADA compliant anyway. It was constructed that way.