Question

Does the IRS consider HOA fees tax deductible? Can I deduct HOA fees from my rental property?

Answer

A Homeowners Association (HOA) is a governing body that sets specific rules and guidelines that you agree to abide by when you purchase property in a condominium, gated community, apartment or other type of planned development. HOA fees are often used to pay for maintenance, landscaping and general upkeep of the community and common areas.

If your property is used for rental purposes, the IRS considers HOA fees tax deductible as a rental expense. However, you might not be able to deduct an HOA fee that covers a special assessment for improvements. If the HOA fee is assessed for an improvement, you may be able to recoup your share of the cost of the improvement by taking a depreciation.

If you purchase property as your primary residence and you are required to pay monthly, quarterly or yearly HOA fees, you cannot deduct the HOA fees from your taxes. However, if you purchase or use the property as a rental property, then the IRS will allow you to deduct HOA fees. If you use the rental property for personal use for a portion of the year, then you can only deduct a portion of HOA fees from your tax return.

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