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Gross Rents

Started by FrankW2 • 9 replies • 1443 views

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FrankW2 (Wisconsin)
Posts: 4
Posted:
Our HOA is using form 1120 and reporting rents collected as gross income. The rents belong to the unit owners. The condo is being run as a condo hotel. I do not feel the rents should be reported as income to the HOA?
GlenL (Ohio)
Posts: 5,491
Posted:
Who is collecting the rents, the HOA and then disbursing them to the individual owners or the individual owners? Either way this is a question for the HOA's accountant.
Studies show that 5 out of 4 people have problems with fractions
DouglasK1 (Florida)
Posts: 2,046
Posted:
Does the association collect the rent for the onwers? If so, does the association take any kind of fee?
Escaped former treasurer and director of a self managed association.
FrankW2 (Wisconsin)
Posts: 4
Posted:
The condominium is operated as a hotel and collects the rents for the rooms. The association keeps 45% as a fee however it reports the gross rents collected as gross income and the 55% allocated to the owners as 'rent paid'.
MichelleK5 (New York)
Posts: 161
Posted:
In my old co-op, we were allowed to rent out our apartments, but had to pay a yearly one month rental fee to the management company. In NYC (Manhattan) this amounted to a nice sum.
As far as I know, this is considered income.

The apartment owners were collecting the rent though.
DouglasK1 (Florida)
Posts: 2,046
Posted:
Hopefully you're only paying taxes on the net income of 45%. Are you filing form 1120H (HOA specific form) or the standard corporate 1120? Was this filled out by a CPA (or other tax professional)? If not, and assuming the 45% adds up to a significant amount, I'd get a professional involved to make sure your returns are handled correctly and in the most tax advantageous way.
Escaped former treasurer and director of a self managed association.
FrankW2 (Wisconsin)
Posts: 4
Posted:
Well effectively only paying tax on the 45% because the 55% is deducted as an expense. Filing 1120 by a CPA firm
I am a CPA. HOA not paying taxes because of tax loss carryforward. Also, incorporated as a not-for-profit but I'm not sure that has any impact.
DouglasK1 (Florida)
Posts: 2,046
Posted:
Do you feel that reporting the gross rents with offsetting expenses of the amount paid to the owner is causing any financial or other harm to the association? If not, it just seems like a difference of opinion between CPAs, which nobody here is probably qualified to referee.
Escaped former treasurer and director of a self managed association.
FrankW2 (Wisconsin)
Posts: 4
Posted:
No the bottom line is the same. I'm just curious as to how most HOA's handle it. I'm new to the HOA space. I don't think rents collected should be reported as income by the HOA because the rents don't belong to them. CPA battle is correct.
DouglasK1 (Florida)
Posts: 2,046
Posted:
I don't think there are very many (if any) posters here where their association acts as a leasing agent, so there's a good chance that you won't get any replies here that are based on actual experience.
Escaped former treasurer and director of a self managed association.

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