Is homeowners' association fees deductible on my taxes?
With tax season coming up fast, many people are looking for any advantage they can find when it comes to claiming deductions and reducing their tax bill.It's easy to overlook legal deductions that may not have been considered before, and there can be a lot of questions about what sort of deductions are allowable.
There are several situations in which you can deduct some or all of your association fees.Let's take a look at what an HOA is, what they offer, and what that can mean for you on April 15.
You can be required to join the homeowners association in certain neighborhoods, gated communities, condominiums, and other planned developments if you purchase property there.Staying on top of the property's upkeep and appearance is often required by regulations.
Fees or dues are part of being a member of an association.These can be used to pay for services such as landscaping, trash removal, snow plowing, and general maintenance.They often pay for shared amenities.Sometimes a portion of your fee is put into a savings account to help fund larger projects.
An individual property owner may be able to find some allowable deductions for home maintenance or improvement, but they are not always deductible.It may already feel like dealing with taxes because of the fees that can run from hundreds to thousands of dollars per year.You can deduct portions of those fees in your next IRS filing.
If your property is only used for rental purposes, the IRS will allow you to deduct the entire fee from your taxes.Any special fees or portions used as a special assessment for improvements would not be allowed.You should be able to recover a portion of the cost for improvements by taking depreciation.
If you rent out the property for a period of time, you can deduct a portion of the fees if they are related to your primary residence.
Is it possible to use the rest of your property as your primary residence if you rent out part of it?If your property is being rented out, you should be able to deduct a portion of the HOA fees.
You can deduct expenses related to your home office if you are self-employed.It's a must that your office is your primary place of business or at least where you meet clients.The home office doesn't need to be an entire room, but a separate space used for business.An office taking up half of a basement or a desk in the corner of the bedroom would qualify, but using a laptop on the couch would not.In case of an audit, you may need to provide photographic proof that your home office is what you say it is.
You can deduct home expenses equal to the portion of your home office.10% of your property taxes, mortgage interest, repairs, and utilities can be deducted if you claim that 10% is being used as your home office.10% of your fees can be deducted.
The Tax Cuts and Jobs Act only allows this deduction for self-employed people.These deductions do not apply if you are working from home.
You can take similar deductions if you use part of your home for warehousing inventory.You have to meet certain IRS qualifications, such as being in the retail or wholesale business and having no other place of business besides your home, to be allowed.
To make sure you don't violate any regulations, you should consult a tax expert and check your homeowner's association agreement.
A homeowner's association can be a bit of a mixed bag.The costs can sometimes run high and there are benefits to maintaining property values.There are restrictions on how much of your fees can be deducted from your taxes, but there are other options.
Make sure to check with your tax expert if you want to claim any of the above- mentioned deductions.You might have missed some deductions.
Henderson Properties was founded in 1990 and is a family-owned company.Associations, rental property management, home renovations, and home sales are some of the services offered.We will be happy to answer any questions you might have.