HOA Finances

Started by TracyJ • 5 replies • 1970 views

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TracyJ (Florida)
Posts: 1

Posted:

I attended our HOA meeting this morning and someone had informed the members that a HOA can not make more than $50 in interest a year. Is that true? We have a surplus of $$ that we would like to put into a Money Market Account or something similar to save for fence replacements, and other emergencies. Are you aware of such laws? Thank you .

RogerB (Colorado)
Posts: 5,067

Posted:

Tracy, there is no such law. Your Board should be investing; I suggest you review posts on this topic posted on this board. We suggest CDs for reserve funds and a combination of money market and checking for operating funds with a minimum held in checking and transferring from MM as needed. Some HOAs make thousands of dollars from investments.

WilliamM1 (Florida)
Posts: 2

Posted:

We have $10,000 in reserve funds, we placed it in to 4 $2,500 CDs that have differant expiration dates. 90 days, 180, 270 and 365. As each mutures we roll them over to a one year cd so that we always have access to $2,500 with in 90 days. We also roll over the intrest.

Bill

SwanB (Washington)
Posts: 199

Posted:

We are a nonprofit filed with the state and have the ability as a nonprofit to file federal income tax as such. However since our expenses generally outweigh our income we are able to file our income tax as a corporate tax entity without paying taxes. Unfortunately we are now starting to accrue too much interest income and are having to address how we file the current year's income tax.
Managing an HOA takes the skill of wearing alot of different hats at the same time, doesn't it?

RogerB (Colorado)
Posts: 5,067

Posted:

Managing an HOA takes the skill of wearing alot of different hats at the same time, doesn't it? So true Swan!

Many HOAs use IRS form 1120-H for federal tax. Basically you pay 30% on the interest income after duducting previous years taxes, any financial management fees, and a standard $100 deduction.

RogerB (Colorado)
Posts: 5,067

Posted:

Swan I forgot to add the deduction for a tax preperation fee. I usually don't think of this because it is a free service to all of our clients.

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