Tax Issues Facing Homeowners Associations: Form 1120-H, Over-Assessments and Tax-Exempt Status

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

Conducted on Wednesday, October 30, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide welcomed tax advice for practitioners, board members, and owners participating in or advising homeowners' associations (HOAs). Our panel of experts will help advisers understand the three filing considerations HOAs should consider annually, historical precedents relative to HOAs, and how to minimize taxes paid by these residential associations.


For homeowner associations, the tax implications are complicated. There are three possible ways to file:

  • Tax-exempt under IRC Section 501(c),
  • As a regular corporation under IRC subchapter C, or
  • Quasi tax-exempt under IRC Section 528.

Instead of filing the same way as last year, professionals need to consider or reconsider these three alternatives each year.

All three filing choices are fraught with their own unique tax aspects opening up areas of potential disagreement from questioning member homeowners as well as the IRS. There is no one approach that will always be accepted and easy.

The “fall back position” for an HOA is to file Form 1120 as a regular corporation (under IRC subchapter C). HOAs doing this must consider: 1) the limit on deduction of expenses for membership activities per IRC Section 277; 2.) not paying tax on income to the extent Revenue Ruling 70-604 applies; and 3.) capital contributions and accounts for reserves.

Perhaps the most well-known is the quasi-exempt status for HOAs. However, specific qualifications must be met to file Form 1120-H under IRC Section 528. It can be impossible to qualify in any given year (such as when significant reserves are assessed). Also, what if the election is “busted”?

Finally, what does it take to qualify for full tax-exempt status under IRC Section 501(c)? How can an HOA apply for and receive tax-exempt status, and how should a practitioner handle the IRS’s insistence on non-member access?

Listen as our panel of experts details annual HOA considerations, including whether to file Form 1120 or an 1120-H, when and how to apply for tax-exempt status, applying Revenue Ruling 70-604 for overassessments, and other critical considerations for HOAs.



  1. What is an HOA?
  2. Applying for tax-exempt status
  3. Filing Form 1120
  4. Electing to be taxed under IRC 528 and Form 1120-H
  5. Revenue ruling 70-604; handling over-assessments
  6. Exempt versus non-exempt income and UBIT


The panel will cover these and other essential matters:

  • What is an HOA?
  • Which HOAs should consider applying for tax-exempt status?
  • How should HOAs handle over-assessments?
  • When should an HOA file an 1120 versus an 1120-H?
  • What is exempt income? What income is considered non-exempt?


Knobelsdorf, John
John C. Knobelsdorf, II

Law Office of John Knobelsdorf II

Mr. Knobelsdorf foucuses on business and commerical matters, as well as tax issues for individuals and homeowner...  |  Read More

Porter, Gary
Gary Porter, CPA

Porter & Lasiewicz

Mr. Porter has more than 40 years of HOA auditing and consulting experience, serving associations since 1976. He is the...  |  Read More

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