Tax season is often a time where homeowners may be searching to include every deduction that is allowed when filing a federal tax return. As expected, there are many expenses you pay throughout the year related to your home, but which ones are tax deductible?
Naturally, there will be a limited amount of information on the HOA website in reference to what homeowners should include on their federal tax returns. As a homeowner, you can deduct the mortgage interest paid and the real estate taxes paid but not the homeowners association fees if the home is your personal residence.
Are HOA Fees Tax Deductible?
The process of filing a tax return is stressful for some homeowners as they may be new to living in a homeowners association and doubtful what they can include in their deductions. The last thing you want to do is not include an expense that is allowed as a deduction and miss out on getting your full return. In a few instances, homeowners association fees can be counted as a tax deduction.
For example, if you own a home that is a rental property then you can deduct the HOA fees as a rental expense on your taxes. Another example would be for residents that work from an office within their home for business reasons. A portion of the fees associated solely with the office are considered as tax deductible. If the office consumes 10 percent of your home, then 10 percent of the homeowners association fees can be claimed as tax deductible!
What Counts As Rental Use?
More often than not, homeowners consider a property for rental use only when it is being rented by someone. Actually, the Internal Revenue Service considers the time your house is vacant but available for rent as a rental period.
The IRS allows a variety of deductions that residents may not be fully aware of without visiting the HOA website or consulting with a tax professional. Avoid making a costly mistake by getting informed of the deductions that are available to you!