Taxes Due? No Problem! Capital Gains Tax Break for HOA Members


Paying capital gains taxes on the profit from a sale of real property is the law.  Fortunately most homeowners qualify for a significant tax break when they sell their property.  They can exclude up to $250,000 in gains as a single filer, and $500,000 as a joint filer – if they meet certain criteria.  Another benefit is available to sellers with property in a homeowners association, but many don’t take full advantage of it! Can your sale benefit from this additional tax break?


  • It can if you own property in a homeowner’s association and get the appropriate figures from the finance committee in time to file your taxes!


Whether in a homeowners association or not, any sold property is subject to capital gains taxes. We pay taxes on the net profit, the amount that exceeds our adjusted basis in the property. The larger the adjusted basis, the less our taxable profit. But what happens when the adjusted basis is miscalculated?


  • To get the proper tax benefit, a seller in an HOA development must make sure that their share of the capital improvements expenses made to the association’s commonly owned areas are properly factored in to their personal return, so that the adjusted basis (what determines the net profit) is accurate.


When property is part of an association, there are two types of improvements which should be added to an owner’s adjusted basis.  The first are those made to an owner’s personal unit (like a remodeled bathroom), and the second are those that can be added to the adjusted basis that the HOA made to the building’s common areas (like replacing the clubhouse roof).


Think you may qualify for this additional tax break?  See the finance committee today.  Learn about your share of the HOA generated capital improvement costs that may be added to your adjusted basis. Claim your pro-rated share of the expense and enjoy this benefit of HOA membership.