Association Use of IRS Form 1120-H

An IRS Form 1120-H is the tax filing form used by homeowners associations that want to take advantage of certain tax benefits that allow the association to exclude “exempt function income” from the association’s gross income. Exempt function income consists of membership dues, fees, or assessments from (a) owners of condominium housing units, (b) owners of real property in the case of a residential real estate management association, or (c) owners of timeshare rights to use, or timeshare ownership interests in, real property in the case of a timeshare association. This income must come from the members as owners, not as customers, of the HOA’s services. Assessments or fees for a common activity qualify but charges for providing services do not qualify.