1120-H Income Tax question

Started by LindaR4 • 5 replies • 3346 views

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LindaR4 (Nevada)
Posts: 1

Posted:

We are filing the 1120-H Federal Income Tax form and need to know if we are allowed to deduct the costs of regular maintenance and repairs made to the common areas. We do collect monthly dues to allow the association to maintain the common area, but would like to be able to claim these costs as a deduction, if allowed.

The income tax would be based upon the income received from the investments in our savings accounts, which could be offset by this deduction, if allowed.

Any answers and suggestions would be appreciated.....

Always, Linda

JudithC (Virginia)
Posts: 253

Posted:

Linda, as I remember it you get a choice whether you want to file as an association or as a regular business. You have to make this election, though, at some particular time and can't change your mind. If you file as a business you can deduct such expenses, if you file as a association you cannot. Please don't take this as gospel, but as a start to researching your answer. Our auditor also had the board pass a resolution so that excess funds could be carried forward. We normally file as a regular business, not an HOA.

RogerB (Colorado)
Posts: 5,067

Posted:

Linda, you may not deduct those expenses from the interest income. For HOA nonprofits who qualify to use IRS form 1120-H their tax normally = income derived outside the HOA assessments (such as investment income) less [taxes paid the prior year, cost for tax preparation, cost directly involved for managing investments (if any) and the standard deduction of $100] x 30%.

JudithC (Virginia)
Posts: 253

Posted:

I guess I was not clear, I was saying you could file as a regular corporation which is not the 1120-H form and then be able to offset income by expenses. i.e. there are two different forms that one can use, but there are restrictions on when you choose how you will file and I do not know what those restrictions are. Our auditor was making the choice every year for us. It saved us a good deal of money from just routinely filing as an association which we had been doing until we got this firm who specializes in associations.

RogerB (Colorado)
Posts: 5,067

Posted:

The two attachments provide information on taxes. One attachment discusses the two forms, 1120 and 1120-H, which are used. The other gives an example of 1120-H.

Disclaimer: the attached information was developed for internal use only and has been been approved by a tax expert nor the IRS

📎 Attachments (2):

⏸ Downloads temporarily unavailable

📝1624524771.doc(22 KB)

📝16245243854.doc(29 KB)

DonM1 (Arizona)
Posts: 2

Posted:

Checkout IRS 710

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