Can HOA Fees Be Deducted From Federal Taxes?
It is not uncommon for homeowners who pay homeowners association fees to wonder if the money they paid over the course of a year can be deducted from their federal income taxes.
As with many tax issues, however, there is not one clearcut answer to this question. Instead, the response depends upon a taxpayer’s specific circumstances. In this guide, you’ll learn when HOA fees are legally tax deductible and when they are not.
Are HOA fees ever tax deductible?
It is not uncommon for taxpayers to believe that HOA fees are 100% not a deductible annual expense. And, in many cases, this is correct per IRS rules.
Every HOA is different but most of the time the payments collected from homeowenrs cover the community's ongoing expenses, such as building maintenance for clubhouses and other common areas, trash and recycling removal, snow plowing, and certain utility bills.
When homeowners don’t live in HOA neighborhoods, they can’t deduct regular home maintenance costs when they file their taxes with the IRS. In this vein, people who do reside in HOA communities are not generally allowed to deduct maintenance and community costs either, including homeowners association dues.
There are, though, a few specific scenarios in which HOA fees can be deducted from taxes.
You run a home business.
In some situations, self-employed business owners who work from home may be able to include HOA fees in the home office deduction. This is not, however, true across the board and the home office deduction can be complex.
To make sure you maximize the deduction, it is wise to work with a qualified local tax professional.
You are a landlord.
It is also possible for landlords to deduct HOA fees, in some situations. Again, this is only truly in select circumstances and taxpayers should work with a tax expert to understand the details.
If you determine that your homeowners association dues are legally part of your rental expenses, you can list both rental income and expenses in Part 1 of your Schedule E. Keep in mind that your deductible amount may need to be calculated differently if you only rented the residence for a portion of the year.
Have you ever deducted HOA fees from your taxes?
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