Cohousing-L Mailing List: Re: reserve investment and taxes

[Philip Semanchuk (philip]

> On Apr 18, 2026, at 12:36 PM, Diana Carroll via Cohousing-L <cohousing-l [at] 
> cohousing.org> wrote:
> 
> (Branching topic off from the solar tax credits discussion so as not to
> derail).
> 
> Phillip commented that Pacifica can't take advantage of tax credits because
> they already pay zero in taxes. I asked:
> 
>> Do they not invest their reserves? We file form 1120-H and other than
>>> a small $100 exclusion we pay 30% tax on investment income (interest in
>> our
>>> case).
>> 
> 
> Sharon responded
> 
>> Newer communities don’t have large reserves, and in many recent years
>> there were little to no earnings on savings anyway.
>> 
> 
> Well, sure, but presumably all have *some *reserves getting *some *interest.
> Even just $50k in reserves getting just 2% interest would yield over $1k in
> interest, resulting in $250 in taxable income, so I'm still confused how
> any community has zero taxable interest income other than maybe in their
> first or second year.

This is a good point! We’re turning 20 next month so we are definitely not just 
starting out. I don’t know the details of what you asked. My number for what 
Pacifica pays in tax is based on something that I asked our accountant years 
ago. At the time, perhaps we were at a low point in our reserves, and/or we 
were not investing it properly. I should ask again. As the primary person here 
who is trying to make a financial case for solar, it would make my life a lot 
easier if the tax credits were useful. Thanks for the nudge. :-)

On the topic of reserves, I can think of another co-housing in this area 
(Solterra in Durham, NC) that probably has much lower reserve needs than we do. 
The model at Solterra is that the HOA owns the common house and common grounds 
(pathways, gardens, parking lots, etc.), but dwellings are owned by 
individuals. I can imagine that their reserve requirements are much lower than 
Pacifica’s. Pacifica owns not only all of the common areas, but also the 
exteriors of all the buildings (walls and roofs). 


Cheers
Philip