Filing a homeowners association tax return is as difficult as tax returns come. The complexity of the matter often stumps people, in this article we will take a look at one of the first steps that is taken when filing a HOA return in the state of Nevada. Tax professionals typically discuss tax returns in depth but rarely do they touch on the information surrounding the Nevada HOA tax return. Hopefully, through reading this you will be on you way to understanding this complex tax return and guided to the next step of successfully completing one with compliance to Nevada state laws.
Even though you may have filed a Nevada HOA tax return in the past, the process may still challenge you moving forward. Part of this challenge is the decision on how you will file this return. When filing there are two different approaches you can take. Sadly, information on the matter is often not easily made available to people, here we will discuss what is best for HOAs and if you will be able to meet the requirements.
Nevada HOA Tax Return
HOAs can file tax returns in two different ways: to file as a corporation or to file under IRC Section 528.
Most HOAs will opt to file under the second option as under IRC Section 528 they may be able to have little to no tax liability. If nearly all the income for the association is received from assessment and almost all of the expenses are from maintaining the properties then filing under IRC section 528 would be a good tax strategy for the HOA. Before making this decision though you need to be sure that your Nevada HOA qualifies by meeting the following standards:
- At least 85% of the units must be used as residences.
- A minimum of 60% of the association’s gross income must be received from owners in their capacity as HOA members and not as customers of goods or services.
- At least 90% of the HOA’s expenses must be for operating and capital expenses that relate to the HOA’s exempt function.
- Any residual income may not be used for the benefit of the members.
This choice is relevant in all states, Nevada will have additional requirements that must be met in order to be in compliance with its filing regulations. This information is a good start to finding success with your HOA tax return filing. Also, make sure you don’t miss the filing due date.
Now that you have a basis for understanding the complex process of filing an HOA tax return in Nevada it is crucial that you set out to discover the specific requirements in Nevada. To ensure that you meet these requirements it is best to use a CPA or other tax professional who will be able to assist you during this process.
Serving the Nevada communities of: Boulder City, Caliente, Carlin, Carson City, Elko, Ely, Fallon, Fernley, Henderson, Las Vegas, Lovelock, Mesquite, North Las Vegas, Reno, Sparks, Wells, West Wendover, Winnemucca, Yerington.