HOA Tax in Colorado

Question:

IS A COLORADO LIMITED EXPENSE COMMUNITY REQUIRED TO FILE FEDERAL & STATE TAX RETURNS?

IF A HOA ELECTS OR DOES NOT QUALIFY (FOR TAX PURPOSES) NOT USE FORM 1120-H , ARE THE ASSESSMENTS NOT TAXABLE?

– Rundy

 

Answer:

Hi Rundy,

All homeowners associations that are not recognized by the IRS as exempt organizations must file federal and state tax returns. Associations that don’t elect or qualify to file Form 1120-H must file Form 1120. There are special rules for associations under IRS Code Section 277(a). This allows Associations to deduct operating expenses against membership income.

 

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