Question:
HOA Income Tax Return Requirement
Please tell me whether there is a minimum income threshold after which a HOA is required to file form 1120 or 1120-H.
I think I recall seeing that a HOA is required to file after recording $150,000 in Gross Revenue.
Thanks
– Gary
Answer:
Hi Gary,
Form 1120-H does have specific requirements to qualify as a homeowners association. According to the IRS, the following must apply:
1. At least 60% of the association’s gross income for the tax year must consist of exempt function income (defined later).
2. At least 90% of the association’s expenses for the tax year must consist of expenses to acquire, build, manage, maintain, or care for its property, and, in the case of a timeshare association, for activities provided to, or on behalf of, members of the timeshare association.
3. No private shareholder or individual can profit from the association’s net earnings except by acquiring, building, managing, maintaining, or caring for association property or by a rebate of excess membership dues, fees, or assessments.
4. The association must file Form 1120-H to elect under section 528 to be treated as a homeowners association.
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