Cohousing-L Mailing List: Re: Question re: HOA taxes

[Sharon Villines (sharon]

On 10 Jun 2011, at 12:22 PM, Zita Xavier wrote:

> We know HOAs have to pay big taxes on the
> wrong kind of income, maybe as high as 50%?

I don't think taxes are that high, but the things to remember are that:

1. You factor taxes into your expenses and price your product accordingly — 
same for charging for guest rooms, and

2. You still have more income than you had before.

You only have taxes to pay if you have income. If you earn $10,000 above other 
expenses and the tax rate is as high as 50%, you still have $5,000 you didn't 
have before. 

Income from sales - production expenses & taxes = profit. If the profit is not 
high enough to be worth the effort, you may not want to incorporate the farms 
into the HOA. 

Only a lawyer and a CPA can tell you which ownership structure is best in terms 
of taxable income, partly because it varies widely from one state to another.

Sharon
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Sharon Villines
"We are confronted with insurmountable opportunities." Walt Kelly