If you’re a homeowner, you’re probably wondering if your HOA fees are tax deductible?
The answer depends on your situation.
Home Owner Association (HOA) fees are generally not deductible for primary residences, except under specific conditions like rental use or home office for self-employed individuals.
Let’s take a deeper look into whether or not you can write-off your HOA fees.
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Key Takeaways:
- Capital improvement assessment: HOA capital improvement assessments are not tax-deductible but can affect your home’s cost basis.
- Special assessment: Special assessments by HOAs are generally not tax-deductible unless for maintenance on rental properties.
- Condo fees: Condo fees, like HOA fees, are not deductible for personal residences but can be for rental properties.
Keep reading to get everything you need to know about this tax season tip.
What is an HOA?
If you’re not familiar, a Homeowners Association (HOA) is an organization that oversees a neighborhood, community, or development.
Usually, all members in the community will be responsible for maintaining certain standards that are set by the HOA.
Members may also be required to pay a fee each month or year so that the HOA can handle communal tasks like snow removal or amenity upkeep.
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Are HOA Fees Tax Deductible?
When it comes to whether or not these membership fees can be deducted from your income, there are three answers:
- If the HOA fees are associated with your permanent residence, then you CAN NOT deduct them.
- Or if the HOA fees are associated with a property that you rent out, then you are allowed to deduct all HOA fees as a rental expense.
- If you rent out part of your home but live in the other part as your permanent residence, then you can deduct the HOA fees associated with the portion of your home that you rent out. However, even if this is your primary residence then there is still an exception to this rule that will allow you to find a few deductions.
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Can You Write-Off HOA Fees if You Work From Home?
Yes, if you work from home then you can write off certain expenses related to your home office, which includes HOA fees.
However, this only applies if you are self-employed and choose to work from home.
If you are a W-2 employee who is working remotely then this DOES NOT apply to you. Luckily, there is yet another exception to this rule.
Remember: Keep track of your expenses and income on a spreadsheet or bookkeeping program such as FreshBooks.
What Can Home Owners Write-Off on Taxes?
If you live in a home as your permanent residence but are not self-employed, there are still a few ways that you can reduce your tax bill.
Here are a few more homeowner’s expenses that you can deduct from your income when April 15th rolls around:
- Mortgage interest
- Property tax payments
- Capital gains from the sale of your home
Comparing HOA Fees and Condo Fees
Both HOA fees and condo fees are used to maintain common areas and amenities.
However, neither is tax-deductible for personal residences. For rental properties, both types of fees can be deducted as rental expenses.
HOA Capital Improvement Assessments
The HOA Capital Improvement Assessments are not tax-deductible, but they can increase the cost basis of your home.
This means that when you sell your home, you may pay less in capital gains taxes due to the increased cost basis.
However, these assessments might also lead to higher property taxes in the interim.
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Are Special Assessments Tax Deductible?
Special assessments are additional charges by the HOA for unforeseen expenses or improvements.
Generally, these are not tax-deductible unless they are for maintenance or repairs on a rental property. If used for improvements, they are not deductible.
If you want more handy tax tips, then feel free to check out my latest articles here. You can sign up to get on the waiting list if you’d like to file with me this year.
My Final Thoughts
Paying taxes is a constant game of cat and mouse, but I’m always here to help you understand the muddy waters of the tax world.
The best way to save yourself money is to learn the rules of the game (or hire an expert who does), so that you can find as many tax benefits and deductions as possible.
I hope that you’ve found this article valuable in learning whether or not HOA fees are tax deductible. If you are interested in learning more, please subscribe here to get alerted of new articles as we write them!
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Until the next money adventure, take care from The Handy Tax Guy Team!
Disclaimer Statement: All data and information provided on this site is for informational purposes only. The Handy Tax Guy makes no absolute representation of the correctness, mistakes, omissions, delays, appropriateness, or legitimacy of any information on this site. **Note: Each client circumstance will vary on a case-by-case basis**
(Original Article Date: August 17, 2021/Updated on January 16, 2025)
