While an HOA can be organized as a nonprofit, all HOAs are generally ‘de-facto’ nonprofits. This is because an HOA is not generally “in business” but rather collects funds and expends them to meet the needs of owners.
While treated as corporations, most HOAs will file as a nonprofit as they can categorize funds earmarked for future capital projects as such. Being nonprofit does not mean the HOA will not have tax payable on investments or income from rentals/amenities. Your HOA will have to file each year regardless of nonprofit status so and should seek advice from a tax professional.
If this interests you, you may be curious about how your HOA fees are used. We dig into that here.
Want to learn more about your HOA? Sign up and run a free Eli Report!