Are HOA Fees Tax Deductible?

Are HOA Fees Deductible?

The IRS determines what expenses, such as mortgage interest and property taxes, you can deduct on your income taxes, but HOA fees don't make the list. Owning a home comes with a slew of costs, such as utility bills, routine maintenance, landscaping, major repairs and more. The IRS considers all of these costs personal expenses, and HOA fees generally fall into this category, but there are a few exceptions.

Learn more: Tax Breaks for Homeowners

When Can I Claim HOA Fees on My Taxes?

In limited circumstances, you may be able to deduct HOA fees to help make the cost of owning a property more affordable.

You Work From Home

When you're self-employed and have a home office or use part of your home to store inventory or product samples for your business, your HOA fees may be considered a deductible business expense. The amount you can deduct is based on the proportion of your home you use for business (more on that below).

You Rent the Property

If you own an investment property, the associated HOA fees may be deductible as a rental expense. When a property is rented year-round, you can generally deduct all the HOA fees. However, if you rent it out for only part of the year—perhaps it's a vacation home you and your family also use—then only a portion of the HOA fees may be deductible based on the time it's rented.

HOA Capital Improvement Assessments

From time to time, a homeowners association may charge a special assessment to cover an unexpected expense. Examples include repairing damage after a natural disaster or paying for a capital improvement that increases the value of a community, such as installing a new pool.

You can't deduct the additional fee while living in your home, but you may get a tax break when you sell. Capital improvements often increase a property's cost basis, which is used to calculate how much you owe in capital gains taxes when you sell. When a property has a higher cost basis, you'll often pay less in taxes when you sell your home.

On the flip side, you may pay more in property taxes in the meantime because they are based on your home's value and increase as property values rise.

How to Deduct HOA Fees

How and where you deduct HOA fees depends on the reason for the deduction.

Home Office Deduction

Home office deductions can be calculated in one of two ways.

• You can deduct a portion of your HOA fees based on the size of the space you use for your business. For example, if 20% of your home is dedicated to your business, 20% of your HOA fees may be tax deductible.
• Alternatively, you may be able to use the safe harbor method to calculate your deduction. The safe harbor method allows you to deduct $5 per square foot of your home that you use for business purposes, up to 300 square feet or $1,500.

Deductions for home office expenses should be listed on Schedule C.

Rental Property Deduction

If you rent out part of your home or have a rental property, you can report rental income and related expenses, such as HOA fees, on Schedule E. The amount that's deductible depends on the length of time you rent the property each year. For example, if you have a vacation property you use for four months of the year and rent it out the remaining eight, you can deduct eight months' of HOA fees. If you rent it year-round, you can deduct the full HOA bill.

If your rentals are set up as a business, you may need to list rental-related deductions on Schedule C instead of Schedule E because the IRS considers the revenue the properties generate business income.

Other Ways Homeowners Can Save on Taxes

The cost of owning a home can add up quickly. Although deducting your HOA fees to save on taxes won't generally be an option, here are a few ways you may be able to save.

• Mortgage interest deduction: Homeowners who itemize their deductions can deduct mortgage interest payments up to the maximum amount allowed by law.
• Property tax deduction: You can typically deduct up to $10,000 in local and state property taxes on your federal tax return if you itemize deductions.
• Discount points: When you close on your mortgage, you can reduce your loan's interest rate by paying discount points upfront. Points on a mortgage for a primary residence that meet certain criteria may be tax deductible in the year you pay them.
• Mortgage interest credit: This tax credit is designed to make owning a home more affordable for lower-income people. If you qualify, you may receive a credit for a portion of the mortgage interest you pay each year.
• Energy efficiency tax credit: Many energy-related tax credits expired at the end of 2025, but you may still be able to claim a home credit of up to $5,000 for energy-efficient upgrades if you purchase a qualifying home before July 1, 2026.

Learn more: How the New Tax Law Changes Affect You

Frequently Asked Questions

The Bottom Line

With a few exceptions, HOA fees aren't typically tax deductible, but other potential tax breaks could save you money. Understanding how they work can help you manage your finances as a homeowner. Since the tax code is complicated and often changes, it's a good idea to consult with a professional tax attorney or accountant who can offer you personalized guidance and help you avoid potential penalties.