Fees Charged by MC's

Started by SidneyP • 2 replies • 1160 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

SidneyP (Florida)
Posts: 302

Posted:

Susan...I have copies of all the financials, the line item in the MC budget is $850....it is all the nickle and dime stuff that goes alone w/the contract. The President signed this contract(she did get votes from "her Board"....Above the $850. is POBox(never had before), telephone fee(never had before), mileage(never had before)quite a bit of additional office expenses, quite a bit additional accounting expenses, etc...What exactly does the $850. cover?...May I add, we are a very small community(77) units, with no amenties, like pool/tennis court, not gated...nothing much to oversee.

Don't reale estate companies get reimbursed on their taxes as a business expense for the phone and mileage? I know if my insurance company picks up most of my medical expense, I can not claim that amount on my medical expenses for a deduction....Shouldn't this be the same for these PM expenses?....Are they allowed to charge their clients for these services and then use the same figures for right off?...Are these expenses that most MC add?

If the PM goes to the bank to deposit the checks from 20 different clients, and they chare each for the mileage...What a sweet deal they have....The same w/the phone.

DeeB (Arizona)
Posts: 18

Posted:

Sidney,

If your property manager is charging you for these expenses, it becomes a reimburseable expense to them, to which they either have to book the money received from you as income and then yes they are allowed to take the expense, or they book the income against the expense which in either way decreases the amount of expense they are allowed to take.

The medical insurance doesn't quite work the same way as you suggest. You get to claim the amounts you pay as medical insurance premiums, (if not under a cafeteria plan), as a deduction as well as actual out of pocket office visits and prescriptions, etc.. The other part of your medical bills, picked up by your insurance company, you don't get to deduct as you never had to pay for it.

A better comparison would be if you as an employee had to make errands for your employer, and you did so in your own car, your employer would then owe you the time spent doing the errands, but also for the expense of using your car. If your employer did not reimburse you for these expenses, (either actual, or standard mileage), then you would be able to claim this as an unreimbursed employee expenses on your tax return, (itemized deductions). However, if your employer reimburses you for all of the expense and you submit a report then you do not need to claim the income from them or the expense, you can but it would just be a waste of time. However, if they only pay you for part of the expenses you incurred as their employee, you would claim all of your expenses and would then have to reduce it by the amount that they actually did reimburse you for. Your deduction then becomes the amount that they did not reimburse you for.

A company, your property manager, would have to record the income and the expense in one of the two ways I described above.

There should however, be a Manangement Agreement, that spells out what the property manager is paid for. Some management agreements state that if additional adminstrative or accounting fees are paid then they are subtracted from the management fee that is paid to the property manager. I would read through your Management Agreement or Operating Agreemnet to see if this is stated. If it is not, it is always something that you can bring up as a Board and have the Management Agreement and/or Operating Agreement amended, if your CC&R's allow you to amend them. You may need to get association member approval. But usually, if you are paying a management fee that should be inclusive of those items, as the property manager should be considering these items when they set their fee.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Sydney,

First of all is your prop. mgr. an employee of the assn or does he/she work for a management co. that has a contract with the assn? If the former, these expenses would be included in the income reported on a 1099. They are only expenses if they are out-of-pocket costs to him/her. However, if the latter, then the P.M. is not being paid the mgmt co is. Also, the contract, whether with the prop. mgr or a prop. mgmt co. would state what expenses are to be reimb. It's not unusual for postage, office supplies, preparation of mailings and budget, etc to be billed as extra expenses that are in addition to the base monthly fee.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here