Avoid Penalties from the IRS

01 Mar 2019

Most Florida Community Associations, (Condominiums, Homeowners Associations and Cooperative Associations) are organized as “Not-for-Profit” Corporations. So, no need to file a tax return-right?

That would be wrong!  While most Florida Community Associations pay little or no taxes directly, (which may not be true for Associations that directly rents property or otherwise engages in income-producing activities, other than collecting assessments), a community Association must still file Federal Income Tax returns.

Condominium Associations and Homeowners Associations will usually file an IRS “Form 1120-H.”

If at least 60% of the Association’s gross income is from membership dues, fees or assessments, and 85% of the property or Units are used for residential purposes (which may include rentals by the members) the Association will pay little or no Federal Income Tax.

Those in Cooperatives will be required to file an IRS “Form 1120-C.”

The Form 1120-C, is more complex, and requires the allocation of patronage and non-patronage income. The Form 1120-C should be left to the Cooperative CPA!