Cohousing-L Mailing List: Re: Donations to/from HOA and Federal tax (was Re: HELP MAKE COHOUSING MORE AFFORDABLE)

[Sharon Villines (sharon]

On Nov 22, 2013, at 1:53 PM, Diana Carroll <dianaecarroll [at] gmail.com> wrote:

> On Fri, Nov 22, 2013 at 11:04 AM, R.P. Aditya <aditya [at] grot.org> wrote:
> 
>> If your HOA makes a donation to an IRS recognized (501c3 etc.)
>> nonprofit, then the HOA should be able to deduct it.
>> 
> Thanks, but my question was how.  Special rules apply to HOAs...if they
> file a 1040H they only pay taxes on "non-exempt" income which does not
> include condo fees...and can only deduct expenses which apply specifically
> to that income.  Which...does or does not include donations?  So the
> question of whether and how to deduct charitable donations is very specific
> to Home Owners' Associations.

Perhaps part of the confusion is around the word "exempt". 

Many kinds of income are exempt from taxes for one reason or another -- 
business expenses incurred when trying to earn money being a major one.

Only donations to 501c3 IRS approved organizations, which exist for the good of 
the public, are tax exempt as charitable donations. Other donations are not 
customarily tax deductible. 

When we moved in one of our residents believed we should be tax-exempt because 
we would demonstrate a more equitable, economically, and environmentally sound 
housing model. We were doing something good. (Runners often feel the same way.) 

If we had applied for 501c3 status, we would not have been able to own our 
units. A 501c3 cannot exist for the profit of it's members. It's mission is to 
serve the public interest, to serve others at no profit to itself. HOA's serve 
owners. 

Some communities with special programs apart from the HOA do have 501c3 status 
for those programs. (I don't have examples but I remember seeing them discussed 
here.)

Sharon
----
Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org