Can HOA Fees Be Used as a Tax Deduction for a Second Home?

HOA fees are deductible as a business expense, but never a personal one.

HOA fees are deductible as a business expense, but never a personal one.

Homeowners association fees on your first home are almost never deductible. If you own a second home and nobody uses it but you and your family, fees for that house aren't deductible either. If you rent the home out when you're not there, however, you can probably claim at least some of the fees as a rental-property expense.

Rental Property

A rental house gets a different tax treatment from residential property. Almost all your expenses are tax-deductible: maintenance, repairs, property taxes and also homeowners association dues. If you only rent out property part of the year, you only claim part of the costs. If you live there three months and rent it out nine months, for instance, you can deduct 75 percent of HOA fees and other expenses from your rental income.

Personal Use

The IRS has rules for defining what counts as personal use and what counts as rental time. For instance, if your house is empty but it's available for rent, that counts as a rental period. If you let family or friends stay there, that counts as personal use. Even if your kids pay rent for their stay, if it's less than the going rate a stranger would pay, their time counts as personal use, not business.

Time

If your second home sees fewer than 15 days of personal use during the year, or less personal use than 10 percent of the time it's rented out -- whichever figure is bigger -- the IRS doesn't count it as a home. It's a rental property and you can write off all your rental expenses against rental income. If it does qualify as a home but you rent it out fewer than 15 days, you don't report your rental income. You also can't take off any rental expenses.

Claiming

You report your rental deductions on Schedule E, along with rental expenses. If you hire someone to manage the rental details for you, you can't deduct rental red ink from non-rental income. If you take an active role running the property -- calling contractors, vetting tenants, looking for new renters -- you can deduct up to $25,000 in rental losses. Either way, any losses you can't deduct get carried over to next year when you can try writing them off again.

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