Form 1120-H, U.S. Income Tax Return for Homeowners Associations

What is 1120-H?

A qualifying homeowners association, condominium management association, or timeshare association can elect each year to be taxed under section 528 by filing Form 1120-H. The election excludes exempt function income, such as membership dues, fees, and assessments from owners, from gross income. Only the association’s other income, like interest or non-member rental income, is taxed, after a small deduction, at a flat rate.

The election is made annually simply by filing the form. An association that does not elect, or does not qualify, files a regular corporate return such as Form 1120 instead. Qualification depends on tests covering the share of income from members and the share of expenditures on the property; the current instructions spell out the percentages.

Who files 1120-H?

• Homeowners associations that qualify under section 528 and choose the simplified election
• Condominium management associations electing the same treatment
• Timeshare associations, which use the form under a separate flat rate
• Associations that fail the qualification tests file Form 1120 instead

How to fill out 1120-H

1. Enter the association’s name, address, EIN, and association type in the header.
2. Answer the questions establishing that the association meets the income and expenditure tests for the year.
3. Report taxable income items such as interest and non-exempt rents, and the deductions directly connected to producing that income.
4. Compute the tax on the net amount at the flat rate shown on the form, then apply any payments and credits.
5. Download the finished PDF and file it by the return due date in the current instructions; filing the form is itself the annual election.