A HomeOwner Association- HOA is an organization that manages a neighborhood. It typically sets up rules and regulations for what can be done with the property in the area, what color your house should be, what kind of plants you are allowed to have on your property, how long you can park your car outside of your driveway, what kinds of animals you are allowed to keep as pets - these are all things that HOAs regulate. This post will discuss what HOA fees cover, what do HOA fees cover, average HOA fees and more!
What Is An HOA?
Some lots or homes are in an area, community, or neighborhood that is part of an HOA, or HomeOwners Association. Just as the name suggests, an HOA is an "association" or organization that governs a group of homes. In this organization, the members of the HOA are also owners- which is what makes HOA's a little different from other types of associations.
The HOA requires members to pay a monthly fee, which in turn they use for the benefit of the community. For example, if your neighborhood has a community pool or park, then the HOA dues would go toward running and maintaining that community benefit. Additionally, there are HOAs that sometimes take care of the external part of the home. Some HOAs are very strict, with penalties due if you break them, so be aware of the requirements.
What Do HOAs Cover?
HOAs can range in size and scope but what they all have in common is that there will be rules that govern it. The HOA Bylaws define what the HOA is and what its duties are, and what the HOA covers.
Typically, HOAs will cover exterior maintenance such as landscaping and cleaning of shared areas like sidewalks or swimming pools. They'll also provide amenities such as a clubhouse, pool, gymnasium, playgrounds or tennis courts. Each HOA is different on what they cover, so if your home or building lot is in an HOA, check with your HOA to get a copy of the bylaws so you can understand exactly what they cover.
Are HOA Fees Tax Deductible
The IRS views HOA dues as deductible as a rental expenditure if your home is used for commercial purposes. The payment of monthly, quarterly, or annual HOA fees does not qualify you to deduct the HOA fees from your taxable income if you acquire property as a primary residence and are required to pay monthly, quarterly, or annual HOA fees, according to HR Block. Be sure and check with your tax advisor to understand what's allowed for your specific situation.
What Are The Average HOA Fees?
HOA fees vary considerably, but they're likely to be between $100 and $1,000 each month, with the average being around $200. The cost of an HOA fee varies depending on the type of property and the amenities available—the more services and facilities provided, the greater the cost.
HOA rules can cover virtually anything. From how long you're allowed to park your car on the street, if at all, to the color of your home, to even age requirements of people allowed to live there. Because of the vast variety of HOA rules that could be implemented, it's very important to get a copy of the HOA bylaws for the community you're looking at living in. Understand what the rules are, what you're allowed to do, what the HOA covers, and what the fees are.
Homeowners need to take into consideration what benefits they are receiving from HOAs when paying the monthly dues. What are you wanting to be able to do at the home and use the home for? Do you want to be able to AirBnB your home? Check if it's allowed in your HOA. They can seem like a pain, and can add a considerable expense, but the benefits of HOAs can also be considerable. The big thing is to understand what you're getting into and decide if it's worth it to you and your situation.
Contact Bianchi-Tillett Developers to schedule a free consultation for the area you're looking at building in. We'll help you navigate the process and help you understand all the details of building a new custom home. Contact us today!
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