A Complete Guide to Form 1120-H for Homeowners Associations in 2025

Form 1120-H remains one of the most essential tax forms for qualifying homeowners associations (HOAs). It allows associations to simplify their federal tax filing and take advantage of favorable tax treatment when they meet certain criteria. With some updates in 2025—including expanded deductions and electronic filing—it’s critical for HOA boards, property managers, and financial administrators to understand how to file correctly, avoid penalties, and maintain compliance with IRS guidelines.

‍

‍

‍

‍

This guide explains what Form 1120-H is, who should file it, key changes in 2025, and how to avoid common filing mistakes. We'll also link directly to the official IRS forms and instructions for your convenience.

‍

What Is Form 1120-H?

Form 1120-H is the official U.S. Income Tax Return for Homeowners Associations. It’s used by HOAs, condo associations, timeshare associations, and residential real estate management associations that qualify under Section 528 of the Internal Revenue Code. This form provides a simplified way for qualifying associations to report income and claim deductions, paying federal taxes only on non-exempt income such as interest or income from non-members.

Instead of using the more complex Form 1120 (the standard corporate tax return), HOAs that meet IRS qualifications can file Form 1120-H and benefit from a flat tax rate while avoiding many corporate tax complexities.

‍

What’s the Purpose of Form 1120-H?

The primary purpose of Form 1120-H is to give homeowners associations a streamlined way to comply with federal tax laws while still reporting their income, expenses, and tax obligations. It helps the IRS determine whether the HOA qualifies for special tax treatment and ensures the organization pays tax only on income not related to its exempt function—such as interest, non-member revenue, or advertising income.

Filing Form 1120-H also promotes transparency within the association. By clearly reporting financial activity, the board can build trust with homeowners and ensure dues are being used for the community's benefit.

‍

Who Should File Form 1120-H?

HOAs may file Form 1120-H if they meet all the requirements outlined in IRS Publication 535 and Section 528 of the Internal Revenue Code. To qualify, an association must:

• Be organized primarily to manage residential real estate (i.e., homes, condos, or townhomes)
• Allocate at least 90% of its expenses to maintaining, managing, or improving the property
• Receive at least 60% of its gross income from assessments, dues, fees, or similar member payments
• Use substantially all of its income for exempt function purposes

‍

If an association doesn’t meet these requirements, it may need to file a standard corporate return using Form 1120, which can carry a greater tax burden.

‍

What’s Included in Form 1120-H?

Understanding the sections of Form 1120-H is critical to filing correctly. The main components include:

• Identifying Information: Basic information like the HOA's name, address, tax year, and Employer Identification Number (EIN).
• Income Reporting: Total income from assessments, dues, rentals, interest, and any services provided to members or non-members.
• Deductions: Common allowable deductions include repairs, maintenance of shared spaces, landscaping, utilities, administrative expenses, legal or accounting fees, and community improvement projects.
• Tax Calculation: Only non-exempt function income is taxed. The 2025 rate remains at 30% for most HOAs and 32% for timeshare associations.

‍

You can download the current Form 1120-H PDF and the full Instructions for Form 1120-H (2024 edition) from the IRS website. These instructions are still used for the 2025 tax year unless the IRS releases a newer version.

‍

2025 Updates to Form 1120-H

Several changes in 2025 affect how associations file Form 1120-H. Here’s what’s new this year:

1. Electronic Filing Is Now Available (and Sometimes Required)

Starting in 2025, HOAs can electronically file Form 1120-H through approved IRS e-file providers. If your HOA submits 10 or more returns (including W-2s or 1099s) during the year, e-filing is now mandatory.

‍

This streamlines the filing process and reduces paperwork delays, helping HOAs submit more accurate returns.

‍

2. Expanded Deduction Categories

The IRS has broadened the scope of deductible expenses for HOAs in 2025. In addition to standard deductions like maintenance and administrative costs, associations may now deduct:

• Community improvement projects (e.g., landscaping, playgrounds, security gates)
• Safety upgrades or eco-friendly installations (e.g., solar panels, irrigation systems)
• Event and recreation facility expenses tied to member services

‍

These updates encourage HOAs to reinvest in their communities while lowering their overall tax liability.

‍

3. Updated Penalties for Late Filing

The minimum penalty for returns more than 60 days late has increased to $510 or 100% of the tax due, whichever is less. These penalties can be avoided by filing on time and submitting Form 7004 for an extension if needed.

‍

📄 Form 7004: Application for Automatic Extension

‍

When Is Form 1120-H Due in 2025?

For calendar-year associations (which is most common), Form 1120-H must be filed by April 15, 2025.

• If your HOA operates on a fiscal year basis, the deadline is the 15th day of the 4th month after the end of the fiscal year.
• To request more time, submit Form 7004 by the original deadline. Note that taxes owed are still due on April 15 even if an extension is granted.

‍

Common Mistakes to Avoid

Many HOAs make errors on Form 1120-H that can lead to audits or penalties. Here are four common pitfalls to avoid:

❌ Misclassifying Income

Only income from assessments or dues paid by members is exempt. Interest income or revenue from non-members (such as renting clubhouse space to the public) is taxable.

‍

❌ Overlooking Deductions

Some HOAs forget to claim deductible expenses like software subscriptions, legal consultations, or community events that support member services.

‍

❌ Missing Deadlines

Filing late without an extension results in penalties and interest. Mark your calendar for April 15 and submit early to avoid issues.

‍

❌ Poor Record-Keeping

Inadequate records make it difficult to justify deductions and accurately complete the form. Use accounting software and retain receipts, invoices, and bank statements throughout the year.

‍

Best Practices for a Successful Filing

Here are a few expert tips to help your HOA stay compliant:

• Use accounting tools like QuickBooks or HOA-specific software to track finances.
• Review IRS instructions annually as tax law and form layouts can change. Always download the latest version of Form 1120-H instructions.
• Consult a tax professional experienced in nonprofit or HOA tax filing to maximize deductions and avoid errors.
• Communicate with board members and homeowners to promote transparency and ensure dues are being used efficiently.

‍

Helpful IRS Resources for 2025

• 📄 Download Form 1120-H (PDF)
• 📘 Instructions for Form 1120-H (2024, used for 2025)
• 🧾 IRS Overview of Form 1120-H
• 📤 IRS Business E-Filing Guide
• 📂 Extension Form 7004

‍

Final Thoughts

Form 1120-H continues to offer a streamlined way for qualifying HOAs to stay compliant with federal tax laws while minimizing their tax burden. With the 2025 updates—including expanded deductions and mandatory e-filing for many—now is the perfect time for associations to review their financial processes and ensure they’re set up for accurate, penalty-free filing.

Need help organizing your records or understanding HOA tax strategies? A CPA or tax consultant familiar with nonprofit and HOA taxation can be an invaluable resource.

‍

I hope this information was helpful! If you have any questions, feel free to reach out to us here. I’d be happy to chat with you.

‍

Vincere Tax can help you with the tax implications of business taxes, stocks, bonds, ETFs, cryptocurrency, rental property income, and other investments.

‍

Being audited is comparable to being struck by lightning. You don't want to practice pole vaulting in a thunderstorm just because it's unlikely. Making sure your books are accurate and your taxes are filed on time is one of the best ways to keep your head down during tax season. Check out Vincere's take on tax season!

‍

‍

Friends don’t let friends do their own taxes. Share this article!

This post is just for informational purposes and is not meant to be legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor. Vincere accepts no responsibility for actions taken in reliance on the information contained in this document.

‍

About Vincere Tax:
At Vincere Tax, we provide expert tax preparation and planning services designed to help you keep more of what you earn and secure your financial future. Whether you’re catching up on retirement or planning a tax-efficient year ahead, we’re here to guide you every step of the way. Visit us at vinceretax.com to learn more.

‍

The best source of information on tax

For business tax planning articles, our tax resources provides valuable insights into how you can reduce your tax liability now, and in the future.