In order to avoid adverse tax consequences, community associations should consider conducting a vote to apply surplus funds in their operating budgets at the end of their fiscal year to the budgets for their next fiscal year.
The two common tax return filing options for associations are form 1120, referred to as the corporate income tax return, and form 1120-H, which is used by associations to take advantage of certain tax benefits that allow associations to exclude certain income (membership dues, fees, or assessments) from their gross, taxable income. Associations should consult with their accountants to determine which type of tax return they will file, as there are different qualifications and benefits for each. Continue reading
In recent years, community associations across Florida have encountered difficulties in collecting assessments and other outstanding amounts from delinquent homeowners. Often, the delinquent units are leased to third-parties as a source of income for their owners despite the owners’ non-payment of amounts owed, which can be especially frustrating for a community association. Although tenants are not obligated to pay amounts owed by their landlords under most community associations’ governing documents, the Florida Legislature has provided both Chapter 720 Homeowners Associations and Chapter 718 Condominium Associations with multiple statutory avenues to intervene and recover rent directly from the tenants. Continue reading