Cohousing-L Mailing List: Re: Tax Implications of Voluntary Donations?

[Diana Carroll (dianaecarroll]

>
> At Richmond Cohousing, one question we've run into is the tax implications
> of these donations at time of resale. If it matters, we are set up as a
> condo association. Have other communities navigated


Assuming you file an 1120-H tax return as almost all condominiums and HOAs
do, "donations" are taxable as "non-exempt function income", meaning 30%
tax. You can offset this by deducting any expenses related to non-exempt
functions, including for instance marketing expenses.

There are gray areas about condo taxes but this isn't one of them.

Some cohousing organizations have created non-profit corporations separate
from their condominium HOAs. About this I can't advise. We did some earlier
back of the envelope math and did not find financial benefit to doing so.

Diana

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