Are HOA Fees Tax Deductible?

Written by Ricky Nave in Real Estate,Taxes

A boring suburban neighborhood near sunset

If you buy a house as your personal residence, the IRS does not allow you to deduct any HOA fees. However, if you buy a house for use as a rental property, the IRS does allow you to deduct HOA fees on your tax return. If you buy a house that you live in for 4 months of the year and list on Airbnb for the other 8 months of the year, then you can deduct two-thirds of your HOA fees (corresponding to the 8 out of 12 months when you are renting out the property) each year.

If you buy a timeshare, similar rules apply. If you pay HOA fees for a timeshare that you use personally, you cannot deduct those HOA fees from your taxable income. However, if you pay HOA fees for a timeshare that you list on Airbnb, then you can deduct the HOA fees.

Can I deduct HOA fees if I run a business from home?

Despite what I said earlier, you can deduct a percentage (not all) of your HOA fees on your personal residence if you work from home. The exact percentage you can deduct is based on the percentage of your space that you use for business. For example, if you have a 1,000 sq ft home and your home office takes up 120 sq ft, then you can deduct 12% of your HOA fees as a business expense.

However, there are some exceptions to this, such as if you live on a farm or other property with significant space outside of your house.

Are HOA fees tax deductible on a second home?

If you own a second home that you use for only a portion of the year, but you never rent out that second home (e.g. on Airbnb or VRBO) when you aren’t there, then you cannot deduct any of your HOA fees on that home. However, if you do rent out your second home (or at least try to by listing it on Airbnb), then you can deduct the HOA fees for the percentage of the year that the property is listed for rent. For example, if you use your second home for 6 months out of the year and list it on VRBO for the other 6 months, then you can deduct 50% of your HOA fees for that property.

Ricky Nave

In college, Ricky studied physics & math, won a prestigious research competition hosted by Oak Ridge National Laboratory, started several small businesses including an energy chewing gum business and a computer repair business, and graduated with a thesis in algebraic topology. After graduating, Ricky attended grad school at Duke University in the mathematics PhD program where he worked on quantum algorithms & non-Euclidean geometry models for flexible proteins. He also worked in cybersecurity at Los Alamos during this time before eventually dropping out of grad school to join a startup working on formal semantic modeling for legal documents. Finally, he left that startup to start his own in the finance & crypto space. Now, he helps entrepreneurs pay less capital gains tax.

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