United States | Taxes
Are HOA Fees Tax Deductible?
It depends on how you use the home. The IRS answers the question in several publications for 2025 returns, each last reviewed on April 30, 2026. Below is each case, with the publication and the words it uses, and the return the association itself can file.
The short answer
- On a home you live in, no. IRS Publication 530 lists "Homeowners association fees, condominium association fees, or common charges" among nondeductible payments.
- On a rented condo, dues or assessments for upkeep of the common elements are deductible as a rental expense (Publication 527).
- Special assessments for improvements are not deductible. On a rental they may be recovered through depreciation, and on a home you sell they are added to its basis.
- For a home office, IRS Publication 587 does not name HOA or condo fees, so ask a tax professional before you include them.
- The association itself can elect to file Form 1120-H, which leaves owners' dues out of its taxable income if it meets the IRS tests.
Each case, with the IRS source
Scroll the table sideways on a phone.
| Case | What the IRS says | Where |
|---|---|---|
| Home you live in | Not deductible | Publication 530 (2025), "Nondeductible payments" |
| Rented condo, dues for upkeep of the common elements | Deductible as a rental expense | Publication 527 (2025), chapter 4, "Condominiums" |
| Rented condo, special assessment for improvements | Not deductible; may be recovered by depreciation | Publication 527 (2025), chapter 4 |
| Part of the property rented | Split expenses between the rented part and the personal part | Publication 527 (2025), "Renting Part of Property" |
| Home you sell, special assessment for improvements | Added to the home's basis | Publication 523 (2025), Worksheet 2, line 4f |
| Home office | Not named by the IRS; ask a tax professional | Publication 587 (2025), Table 1 |
A home you live in
Publication 530 lists "Homeowners association fees, condominium association fees, or common charges" among the nondeductible payments of a homeowner. It also explains why they are not real estate tax: "You can't deduct these assessments because the homeowners' association, rather than a state or local government, imposes them."
A rental
Publication 527 says an owner who rents out a condo "can deduct any dues or assessments paid for maintenance of the common elements", together with the other rental expenses in its chapters 1 and 2. It also says: "You can't deduct special assessments you pay to a condominium management corporation for improvements. However, you may be able to recover your share of the cost of any improvement by taking depreciation."
If you rent out part of the property, for example one unit of a duplex you live in, you "must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property."
The IRS pages we read name condo dues only. For a rented house in an HOA that is not a condominium, ask a tax professional.
A home office
Publication 587 sorts home costs into direct, indirect and unrelated expenses. Indirect expenses are "Expenses for keeping up and running your entire home", with examples of insurance, utilities and general repairs, and are deductible by your business share. The publication does not name HOA or condo fees, and neither do the Form 8829 instructions, whose line 22 covers "any 2025 operating expenses not included on lines 9 through 21."
Under the simplified method you multiply "$5, the prescribed rate, by the area of your home used for a qualified business use", up to 300 square feet, and deduct no actual home expenses.
Special assessments and basis
When you sell a home, Publication 523 adds to its basis "Any special assessments for local improvements (such as special tax or condominium association assessments that aren't merely for repairs or maintenance)". A higher basis lowers the gain on the sale.
The IRS pages we read do not say whether a special assessment for repairs only, on a home you live in, is deductible. Publication 530 says only that HOA assessments are not real estate tax.
The association's own return: Form 1120-H
A homeowners association, including a condominium management association, can elect each year to file Form 1120-H. The election lets it "exclude exempt function income" from its gross income. Exempt function income is "Membership dues, fees, or assessments" from owners acting as owners, for example to pay principal, interest and real estate taxes on association property, to maintain it, and to clear snow and remove trash.
- At least 60 percent of gross income must be exempt function income.
- At least 90 percent of spending must be "to acquire, build, manage, maintain, and care for association property".
- No owner may profit from net earnings, except through that work or "a rebate of excess membership dues, fees, or assessments".
- Taxable income, such as "Interest on amounts in a sinking fund", is taxed at a flat 30 percent (32 percent for timeshare associations), after a specific $100 deduction.
- The return is generally due by the 15th day of the 4th month after the tax year ends. Once filed, the election for that year cannot be revoked without IRS consent.
- An association that is tax exempt under section 501(a) does not file Form 1120-H.
A small self-managed association has to decide each year whether to make this election and file on time. StraPlex is planned to remind the board of that date.
Common questions
Are HOA fees tax deductible? +
Not on a home you live in. IRS Publication 530 (2025) lists "Homeowners association fees, condominium association fees, or common charges" among payments a homeowner cannot deduct. On a rented condo, dues for upkeep of the common elements are deductible (Publication 527).
Can I deduct HOA fees as real estate taxes? +
No. Publication 530 says: "You can't deduct these assessments because the homeowners' association, rather than a state or local government, imposes them."
Are HOA fees deductible on a rental property? +
For a rented condo, yes: the owner "can deduct any dues or assessments paid for maintenance of the common elements" (Publication 527, chapter 4). The IRS pages we read name condo dues only, so for a rented house in a non-condo HOA, check with a tax professional.
Are HOA special assessments tax deductible? +
On a rented condo, special assessments for improvements are not deductible, but "you may be able to recover your share of the cost of any improvement by taking depreciation" (Publication 527). On a home you sell, special assessments that "aren't merely for repairs or maintenance" are added to its basis (Publication 523).
Can I deduct HOA fees for a home office? +
Publication 587 does not name HOA or condo fees. It treats costs of "keeping up and running your entire home" as indirect expenses deductible by the business share, with examples of insurance, utilities and general repairs. Ask a tax professional whether your fees fit. Under the simplified method, you deduct $5 a square foot up to 300 square feet and no actual home expenses.
What if I rent out part of my home? +
Publication 527 says you "must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property."
Do HOA fees add to the cost basis of my home? +
Special assessments for improvements that are not merely for repairs or maintenance do: Publication 523, Worksheet 2, line 4f, adds them to total basis when you work out the gain on a sale. The pages we read do not list regular fees as part of basis.
Does an HOA have to file a tax return? +
An HOA can elect to file Form 1120-H each year. The election lets it leave exempt function income, mainly owners' dues and assessments, out of its gross income. A tax-exempt association under section 501(a) does not file Form 1120-H. The IRS pages we read do not say which return a non-electing association files.
What are the Form 1120-H tests? +
At least 60 percent of the association's gross income must be exempt function income, at least 90 percent of its spending must be to acquire, build, manage, maintain and care for association property, and no member may profit from its net earnings except through that work or a rebate of excess dues.
What tax rate does Form 1120-H use? +
A flat 30 percent on taxable income for condominium management associations and residential real estate management associations, and 32 percent for timeshare associations, after a specific $100 deduction.
Is interest on the reserve fund taxable for an HOA? +
The IRS lists "Interest on amounts in a sinking fund" among items that are not exempt function income on Form 1120-H, so it falls in taxable income.
When is Form 1120-H due? +
Generally by the 15th day of the 4th month after the end of the association's tax year; for a fiscal year ending June 30, by the 15th day of the 3rd month. An association that missed the election can get an automatic 12-month extension if it takes corrective action within 12 months of the due date.
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