U.S. Income Tax Return for Homeowners Associations

2025

Instructions for

Form 1120-H

U.S. Income Tax Return for Homeowners Associations

Section references are to the Internal Revenue Code

unless otherwise noted.

Future Developments

For the latest information about developments related to

Form 1120-H and its separate instructions, such as

legislation enacted after they were published, go to

IRS.gov/Form1120H.

What’s New

Increase in penalty for failure to file. For tax returns

required to be filed in 2026, the minimum penalty for

failure to file a return that is over 60 days late has been

increased to the smaller of the tax due or $525. See Late

filing of return, later.

Electronic payments. If the association has access to

U.S. banking services or electronic payment systems, it

should use direct deposit for any refunds and pay

electronically for any payments, whenever possible.

Direct deposit. Direct deposit fields have been added

onto the form on lines 26c, 26d, and 26e. If there is an

overpayment on line 25, enter the amount the association

wants refunded on line 26b and complete the direct

deposit information on lines 26c, 26d, and 26e. Instead of

a direct deposit of the association's refund, it can still

choose to have all or part of the overpayment credited to

next year's estimated tax by completing line 26a. See

Line 25. Overpayment, later, for more information.

Making a payment. If there is a balance due on

line 24, go to IRS.gov/Payments for information on how to

make a payment. See Tax Payments and the instructions

for Line 24. Amount owed, later, for more details.

Photographs of Missing Children

The IRS is a proud partner with the National Center for

Missing & Exploited Children® (NCMEC). Photographs of

missing children selected by the Center may appear in

instructions on pages that would otherwise be blank. You

can help bring these children home by looking at the

photographs and calling 1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

The Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent

organization within the IRS that helps taxpayers and

protects taxpayer rights. TAS strives to ensure that every

taxpayer is treated fairly and that you know and

understand your rights under the Taxpayer Bill of Rights.

As a taxpayer, the association has rights that the IRS

must abide by in its dealings with the association. TAS can

help the association if:

Jan 14, 2026

• A problem is causing financial difficulty for the

association;

• The association is facing immediate threat of adverse

action; or

• The association has tried repeatedly to contact the IRS

but no one has responded, or the IRS hasn’t responded

by the date promised.

TAS has offices in every state, the District of Columbia,

and Puerto Rico. Local advocates’ numbers are in their

local directories and at TaxpayerAdvocate.IRS.gov/

Contact-Us. The association can also call TAS at

877-777-4778.

TAS also works to resolve large-scale or systemic

problems that affect many taxpayers. If the association

knows of one of these broad issues, report it to TAS

through the Systemic Advocacy Management System at

IRS.gov/SAMS.

For more information, go to TaxpayerAdvocate.IRS.gov.

How To Get Forms and Publications

Internet. You can access the IRS website 24 hours a day,

7 days a week, at IRS.gov to:

• Download forms, instructions, and publications;

• Order IRS products online;

• Research your tax questions online;

• Search publications online by topic or keyword; and

• Sign up to receive local and national tax news by email.

Tax forms and publications. The association can

download or print all of the forms and publications it may

need on IRS.gov/Forms.

Otherwise, the association can go to IRS.gov/

OrderForms to place an order and have forms mailed to it.

The IRS will process your order for forms and publications

as soon as possible.

General Instructions

Purpose of Form

A homeowners association files Form 1120-H as its

income tax return to take advantage of certain tax

benefits. These benefits, in effect, allow the association to

exclude exempt function income (defined later) from its

gross income.

Electing To File Form 1120-H

A homeowners association elects to take advantage of the

tax benefits provided by section 528 by filing a properly

completed Form 1120-H. The election is made separately

for each tax year and must generally be made by the due

date, including extensions, of the income tax return.

Instructions for Form 1120-H (2025) Catalog Number 24935G

Department of the Treasury Internal Revenue Service www.irs.gov

This extension does not extend the time to pay the tax.

Once Form 1120-H is filed, the association cannot

revoke its election for that year unless the IRS consents.

The association may request IRS consent by filing a ruling

request. A user fee must be paid with all ruling requests.

For more information on ruling requests, see Rev. Proc.

2025-1, 2025-1 I.R.B. 1 (or any successor), available at

IRS.gov/irb/2025-01_IRB#REV-PROC-2025-1.

If the association does not elect to use Form 1120-H, it

must file the applicable income tax return, for example,

Form 1120, U.S. Corporation Income Tax Return.

A homeowners association should compare its total tax

computed on Form 1120-H with its total tax computed on

Form 1120. The association may file the form that results

in the lowest tax.

Automatic 12-month extension to make election. If

the homeowners association fails to make the regulatory

election to be treated as a homeowners association, it can

get an automatic 12-month extension to make the section

528 election, provided corrective action is taken within 12

months of the due date (including extension) of the return.

See Regulations section 301.9100-2 for more information.

Tax rate. The taxable income of a homeowners

association that files its tax return on Form 1120-H is

taxed at a flat rate of 30% for condominium management

associations and residential real estate management

associations. The tax rate for timeshare associations is

32%. These rates apply to both ordinary income and

capital gains.

If the association is tax exempt under section 501(a),

do not file Form 1120-H. See section 6033 and related

regulations. If the association loses its exempt status, see

Regulations section 1.528-8(e).

Electronic Filing

Associations can generally electronically file (e-file) Form

1120-H, related forms, schedules, and attachments; Form

7004 (automatic extension of time to file); and Forms 940,

941, and 944 (employment tax returns). If there is a

balance due, the association can authorize an electronic

funds withdrawal while e-filing. Form 1099 and other

information returns can also be electronically filed. The

option to e-file does not, however, apply to certain returns.

Associations are required to e-file Form 1120-H if the

association files 10 or more returns of any type during the

calendar year (including income tax, employment tax,

excise tax, and information returns). See Regulations

section 301.6011-5. However, these associations can

request a waiver of the electronic filing requirements.

For more information on e-filing, see E-file for Business

and Self-employed Taxpayers on IRS.gov.

Definitions

Homeowners association. There are three types of

homeowners associations.

1. A condominium management association organized

and operated to acquire, build, manage, maintain, and

care for the property in a condominium project

substantially all of whose units are homes for individuals.

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2. A residential real estate management association

organized and operated to acquire, build, manage,

maintain, and care for a subdivision, development, or

similar area substantially all of whose lots or buildings are

homes for individuals.

3. A timeshare association (other than a condominium

management association) organized and operated to

acquire, build, manage, maintain, and care for the

property that has members who hold a timeshare right to

use, or a timeshare ownership interest in, real property of

the timeshare association. A timeshare association cannot

be a condominium management association.

See Regulations section 1.528-4 for information

regarding the “substantially all” test for condominium

management associations and residential real estate

management associations.

To qualify as a homeowners association, the following

must apply.

• At least 60% of the association's gross income for the

tax year must consist of exempt function income (defined

later).

• At least 90% of the association's expenses for the tax

year must consist of expenses to acquire, build, manage,

maintain, and care for its property, and, in the case of a

timeshare association, for activities provided to, or on

behalf of, members of the timeshare association.

• No private shareholder or individual can profit from the

association's net earnings except by acquiring, building,

managing, maintaining, or caring for association property

or by a rebate of excess membership dues, fees, or

assessments.

• The association must file Form 1120-H to elect under

section 528 to be treated as a homeowners association.

Association property. Association property includes

real and personal property that:

1. The association holds,

2. The association's members hold in common,

3. The association's members hold privately within the

association, and

4. Is owned by a governmental unit and is used to

benefit the unit's residents.

Timeshare association property includes property

related to the timeshare project that the association or its

members have rights to use. These rights must arise out

of recorded easements, covenants, or other recorded

instruments.

For more information, see Regulations section 1.528-3.

Taxable income. Taxable income is the excess, if any, of:

1. Gross income for the tax year, excluding exempt

function income, over

2. Allowed deductions directly connected with

producing any gross income except exempt function

income. Allowed deductions include a specific $100

deduction. The following are not allowed.

• Net operating loss deduction (section 172).

• Deductions under Part VIII of subchapter B (special

deductions for corporations).

Instructions for Form 1120-H (2025)

If facilities are used (or personnel are employed) for

both exempt and nonexempt purposes, see Regulations

section 1.528-10.

Caution: PDSs can't deliver items to P.O. boxes. You

must use the U.S. Postal Service to mail any item to an

IRS P.O. box address.

Exempt function income. Exempt function income

consists of membership dues, fees, or assessments from

(a) owners of condominium housing units; (b) owners of

real property in the case of a residential real estate

management association; or (c) owners of timeshare

rights to use, or timeshare ownership interests in, real

property in the case of a timeshare association. This

income must come from the members as owners, not as

customers, of the association's services.

Assessments or fees for a common activity qualify but

charges for providing services don’t qualify.

Extension. File Form 7004, Application for Automatic

Extension of Time To File Certain Business Income Tax,

Information, and Other Returns, to request an extension of

time to file. Generally, the association must file Form 7004

by the regular due date of the return. See the Instructions

for Form 7004.

Examples. In general, exempt function income includes

assessments made to:

1. Pay principal, interest, and real estate taxes on

association property;

2. Maintain association property; and

3. Clear snow from public areas and remove trash.

Income that is not exempt function income includes:

1. Amounts that are not includible in the organization's

gross income other than under section 528 (for example,

tax-exempt interest);

2. Payments from nonmembers;

3. Payments from members for special use of the

organization's facilities, apart from the use generally

available to all members;

4. Interest on amounts in a sinking fund;

5. Payments for work done on nonassociation

property; and

6. Members' payments for transportation.

For more information, see Regulations section 1.528-9.

When To File

Generally, an association must file Form 1120-H by the

15th day of the 4th month after the end of its tax year.

However, an association with a fiscal year ending June

30 must file by the 15th day of the 3rd month after the end

of its tax year. An association with a short tax year ending

any time in June will be treated as if the short year ended

on June 30, and must file by the 15th day of the 3rd month

after the end of its tax year.

If the due date falls on a Saturday, Sunday, or legal

holiday, the association may file on the next business day.

Private delivery services (PDSs). Associations can

use certain PDSs designated by the IRS to meet the

“timely mailing as timely filing/paying” rule for tax returns.

Go to IRS.gov/PDS for the current list of designated

services.

The PDS can tell you how to get written proof of the

mailing date.

For the IRS mailing address to use if you are using a

PDS, go to IRS.gov/PDSStreetAddresses.

Instructions for Form 1120-H (2025)

Note: If the association elects to file Form 1120-H, it

should file for extension on Form 7004 using the original

form type assigned to the entity.

Who Must Sign

The return must be signed and dated by the president,

vice president, treasurer, assistant treasurer, chief

accounting officer, or any other association officer (such

as tax officer) authorized to sign.

If a return is filed on behalf of an association by a

receiver, trustee, or assignee, the fiduciary must sign the

return, instead of the association officer. Returns and

forms signed by a receiver or trustee in bankruptcy on

behalf of an association must be accompanied by a copy

of the order or instructions of the court authorizing signing

of the return or form.

If an association officer completes Form 1120-H, the

paid preparer space should remain blank. Anyone who

prepares Form 1120-H but doesn’t charge the association

should not complete that section. Generally, anyone who

is paid to prepare the return must sign it and fill in the

“Paid Preparer Use Only” area.

The paid preparer must complete the required preparer

information and:

• Sign the return in the space provided for the preparer's

signature, and

• Give a copy of the return to the taxpayer.

A paid preparer may sign the original or amended

returns by rubber stamp, mechanical device, or computer

software program.

Paid Preparer Authorization

If the association wants to allow the IRS to discuss its

2025 tax return with the paid preparer who signed it,

check the “Yes” box in the signature area of the return.

This authorization applies only to the individual whose

signature appears in the “Paid Preparer Use Only” section

of the return. It doesn’t apply to the firm, if any, shown in

that section.

If the “Yes” box is checked, the association is

authorizing the IRS to call the paid preparer to answer any

questions that may arise during the processing of its

return. The association is also authorizing the paid

preparer to:

• Give the IRS any information that is missing from the

return;

• Call the IRS for information about the processing of the

return or the status of any related refund or payment(s);

and

• Respond to certain IRS notices about math errors,

offsets, and return preparation.

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Where To File

File the association's return at the address listed below.

If the association’s principal business, office, or agency is located

in:

Use the following address:

Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana,

Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire,

New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode

Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia,

Wisconsin

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO

64999-0012

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida,

Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi,

Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota,

Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming

Department of the Treasury

Internal Revenue Service Center

Ogden, UT 84201-0012

A foreign country or U.S. territory

The association isn’t authorizing the paid preparer to

receive any refund check, bind the association to anything

(including any additional tax liability), or otherwise

represent the association before the IRS.

The authorization will automatically end no later than

the due date (excluding extensions) for filing the

association's 2025 tax return. If the association wants to

expand the paid preparer's authorization, see Pub. 947,

Practice Before the IRS and Power of Attorney.

Internal Revenue Service Center

P.O. Box 409101

Ogden, UT 84409

space is needed on the forms or schedules, attach

separate sheets using the same size and format as the

printed forms. If there are supporting statements and

attachments, arrange them in the same order as the

schedules or forms they support and attach them last.

Show the totals on the printed forms. Enter the

association's name and employer identification number

(EIN) on each supporting statement or attachment.

Accounting Methods

Other Forms and Statements That

May Be Required

Figure taxable income using the method of accounting

regularly used in keeping the association's books and

records. In all cases, the method used must clearly show

taxable income. Permissible methods include cash,

accrual, or any other method authorized by the Internal

Revenue Code.

Qualified opportunity investment. If you deferred a

capital gain in a qualified opportunity fund (QOF), you

must file your return with Schedule D (Form 1120), Capital

Gains and Losses; Form 8949, Sales and Other

Dispositions of Capital Assets; and Form 8997, Initial and

Annual Statement of Qualified Opportunity Fund (QOF)

Investments, attached. You will need to file Form 8997

annually until you dispose of the investment. See the Form

8997 instructions.

Change in accounting method. Generally, the

association must get IRS consent to change either an

overall method of accounting or the accounting treatment

of any material item. To do so, the association must

generally file Form 3115, Application for Change in

Accounting Method. See the Instructions for Form 3115

and Pub. 538, Accounting Periods and Methods, for more

information and exceptions.

See the Instructions for Form 1120 and Pub. 542,

Corporations, for a list of other forms and statements the

association may be required to file.

Assembling the Return

To ensure that the association’s tax return is correctly

processed, attach all forms and schedules after Form

1120-H in the following order.

1. Form 4136.

2. Form 8978.

3. Form 8941.

4. Form 3800.

5. Schedules in alphabetical order.

6. Additional forms in numerical order.

7. Supporting statements and attachments.

Complete every applicable entry space on Form

1120-H. Do not enter “See Attached” or “Available Upon

Request” instead of completing the entry spaces. If more

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Change of Tax Year

Generally, an association must get the consent of the IRS

before changing its tax year by filing Form 1128,

Application To Adopt, Change, or Retain a Tax Year.

However, under certain conditions, an association can

change its tax year without getting the consent.

For more information on change of tax year, see the

Instructions for Form 1128 and Pub. 538.

Rounding Off to Whole Dollars

You may enter decimal points and cents when completing

your return. However, you should round off cents to whole

dollars on your return, forms, and schedules to make

completing your return easier. You must either round off all

amounts on your return to whole dollars, or use cents for

all amounts. To round, drop amounts under 50 cents and

Instructions for Form 1120-H (2025)

increase amounts from 50 to 99 cents to the next dollar.

For example, $8.40 rounds to $8 and $8.50 rounds to $9.

If you have to add two or more amounts to figure the

amount to enter on a line, include cents when adding the

amounts and round off only the total.

Tax Payments

The association must pay any tax due in full no later than

the due date for filing its tax return (not including

extensions). Do not include the payment with the tax

return. However, see Line 24. Amount owed, later.

Electronic deposit requirement. Associations must use

electronic funds transfers (EFT) to make all federal tax

deposits (such as deposits of employment, excise, and

income tax). An EFT can be made using the Electronic

Federal Tax Payment System (EFTPS). However, if the

association doesn’t want to use EFTPS, it can arrange for

its tax professional, financial institution, payroll service, or

other trusted third party to make deposits on its behalf.

Also, it may arrange for its financial institution to initiate a

same-day wire payment (discussed below) on its behalf.

EFTPS is a free service provided by the Department of the

Treasury. Services provided by a tax professional,

financial institution, payroll service, or other third party

may have a fee.

To get more information about EFTPS or to enroll in

EFTPS, go to EFTPS.gov, or call 800-555-4477. To

contact EFTPS using Telecommunications Relay Services

(TRS) for people who are deaf, hard of hearing, or have a

speech disability, dial 711 and then provide the TRS

assistant the 800-555-4477 number above or

800-733-4829. Additional information about EFTPS is also

available in Pub. 966.

Depositing on time. EFTPS accepts same day

payments of $1 million or less if the payment is submitted

before 3:00 p.m. Eastern time on a business day. If the

association's payment is more than $1 million, the

association must submit the deposit by 8:00 p.m. Eastern

time the day before the date the deposit is due. If the

association uses a third party to make deposits on its

behalf, they may have different cutoff times.

Same-day wire payment option. If the association fails

to submit a timely deposit transaction on EFTPS, it can

still make its deposit on time by using the Federal Tax

Collection Service (FTCS). To use the same-day wire

payment method, the association will need to make

arrangements with its financial institution ahead of time.

Check with the financial institution regarding availability,

deadlines, and costs. Financial institutions may charge a

fee for payments made this way. To learn more about the

information you will need to provide your financial

institution to make a same-day wire payment, go to

IRS.gov/SameDayWire.

Estimated Tax and Alternative

Minimum Tax

The estimated tax and alternative minimum tax

requirements do not apply to homeowners associations

electing to file Form 1120-H. However, a homeowners

association that does not elect to file Form 1120-H may be

required to make payments of estimated tax. Because the

Instructions for Form 1120-H (2025)

election is not made until the return is filed, Form 1120-H

provides lines for estimated tax payments and the

crediting of overpayments against tax if estimated tax

payments or overpayments apply.

Interest and Penalties

Interest. Interest is charged on taxes paid late even if an

extension of time to file is granted. Interest is also charged

on penalties imposed for failure to file, negligence, fraud,

substantial valuation misstatements, substantial

understatements of tax, and reportable transaction

understatements from the due date (including extensions)

to the date of payment. The interest charge is figured at a

rate determined under section 6621.

Late filing of return. In addition to losing the right to

elect to file Form 1120-H, a homeowners association that

doesn’t file its tax return by the due date, including

extensions, may be penalized 5% of the unpaid tax for

each month or part of a month the return is late, up to a

maximum of 25% of the unpaid tax. The minimum penalty

for a return that is over 60 days late is the smaller of the

tax due or $525. The penalty will not be imposed if the

association can show that the failure to file on time was

due to reasonable cause.

Late payment of tax. An association that doesn’t pay

the tax when due may generally be penalized 1/2 of 1% of

the unpaid tax for each month or part of a month the tax

isn’t paid, up to a maximum of 25% of the unpaid tax. The

penalty will not be imposed if the association can show

that the failure to pay on time was due to reasonable

cause.

Reasonable-cause determinations. If the association

receives a notice about a penalty after it files its return,

send the IRS an explanation and we will determine if the

association meets the reasonable-cause criteria. Do not

attach an explanation when the association's return is

filed.

Other penalties. Other penalties can be imposed for

negligence, disregard of rules or regulations, substantial

understatement of tax, reportable transaction

understatements, and fraud. See sections 6662, 6662A,

and 6663.

Specific Instructions

Period covered. File the 2025 return for calendar year

2025, and fiscal years that begin in 2025 and end in 2026.

For a fiscal or short tax year return, fill in the tax year

space at the top of the form.

The 2025 Form 1120-H can also be used if (a) the

association has a tax year of less than 12 months that

begins and ends in 2026, and (b) the 2026 Form 1120-H

isn’t available at the time the association is required to file

its return.

The association must show its 2026 tax year on the

2025 Form 1120-H and take into account any tax law

changes that are effective for tax years beginning after

December 31, 2025.

Name and address. Enter the association's true name

(as set forth in the charter or other legal document

5

creating it), address, and EIN on the appropriate lines.

Include the suite, room, or other unit number after the

street address. If the post office doesn’t deliver mail to the

street address and the association has a P.O. box, show

the box number instead.

If the association receives its mail in care of a third

party (such as an accountant or an attorney), enter on the

street address line “C/O” followed by the third party's

name and street address or P.O. box.

If the association has a foreign address, include the city

or town, state or province, country, and foreign postal

code. Do not abbreviate the country name. Follow the

country's practice for entering the name of the state or

province and postal code.

Employer identification number (EIN). Enter the

association's EIN. If the association doesn’t have an EIN,

it must apply for one. An EIN may be applied for:

• Online by visiting IRS.gov/EIN (the EIN is issued

immediately once the application information is validated);

or

• By mailing or faxing Form SS-4, Application for

Employer Identification Number.

If the association has not received its EIN by the time

the return is due, enter “Applied for” and the date you

applied in the space for the EIN. For more details, see the

Instructions for Form SS-4.

Only associations located in the United States or U.S.

territories can use the online process.

Final return, name change, address change, amended return.

• If the association ceases to exist, file Form 1120-H and

check the “Final return” box.

• If the association changed its name since it last filed a

return, check the box for “Name change.”

• If the association has changed its address since it last

filed a return (including a change to an “in care of”

address), check the box for “Address change.”

• To amend a previously filed Form 1120-H, file a

corrected Form 1120-H and check the “Amended return”

box.

Note: If a change in address occurs after the return is

filed, use Form 8822-B, Change of Address or

Responsible Party—Business, to notify the IRS of the new

address. See the instructions for Form 8822-B for details.

Item A. Type of homeowners association. See

Definitions, earlier.

Item B. 60% gross income test. At least 60% of the

association's gross income for the tax year must consist of

exempt function income. See Exempt function income,

earlier.

Item C. 90% expenditure test. At least 90% of the

association's expenditures for the tax year must consist of

expenses to acquire, build, manage, maintain, and care

for association property, and, in the case of a timeshare

association, for activities provided to, or on behalf of,

members of the timeshare association. Include current

and capital expenditures. Use the association's

accounting method to figure the total.

Include:

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1. Salary for an association manager or secretary;

2. Expenses for gardening, paving, street signs,

security guards, and property taxes assessed on

association property;

3. Current operating and capital expenditures for

tennis courts, swimming pools, recreation halls, etc.; and

4. Replacement costs for common buildings, heating,

air conditioning, elevators, etc.

Don’t include expenditures for property that is not

association property. Also, don’t include investments or

transfers of funds held to meet future costs. An example

would be transfers to a sinking fund to replace a roof, even

if the roof is association property.

Item D. Enter the association's total expenditures for the

tax year including those expenditures directly related to

exempt function income. Use the association's accounting

method to figure the entry for item D.

Item E. Enter any tax-exempt interest received or

accrued. Include any exempt-interest dividend received as

a shareholder in a mutual fund or other regulated

investment company (RIC).

Gross Income

Line 1. Dividends. Enter the total amount of dividends

received during the tax year.

Line 2. Taxable interest. Enter taxable interest income

received or accrued during the tax year on U.S.

obligations and on loans, notes, mortgages, bonds, bank

deposits, corporate bonds, tax refunds, etc. Do not offset

interest expense against interest income.

Note: Do not report any tax-exempt interest on line 2.

Include tax-exempt interest in the amount reported on item

E.

Line 3. Gross rents. Enter the gross amount received for

the rental of property. Deduct expenses such as repairs,

interest, taxes, and depreciation on the proper lines for

deductions.

Line 4. Gross royalties. Enter the gross amount of

royalties received. Deduct expenses on the proper lines

for deductions.

Line 5. Capital gain net income. Enter any gain from

Schedule D (Form 1120). Every sale or exchange of a

capital asset must be reported on Schedule D (Form

1120), Capital Gains and Losses, even if there is no gain

or loss. Attach Schedule D (Form 1120).

Line 6. Net gain or (loss) from Form 4797. Enter the

amount from Form 4797, Part II, line 17. Attach Form

4797. See the Instructions for Form 4797 for more

information.

Line 7. Other income. Enter any other taxable income

not reported on lines 1 through 6. List the type and

amount of income on an attached statement. Do not

include exempt function income (defined earlier). If the

association has only one item of other income, describe it

in parentheses on line 7.

Instructions for Form 1120-H (2025)

Deductions

Line 9. Salaries and wages. Enter the total salaries and

wages paid for the tax year. Do not include salaries and

wages deductible elsewhere on the return, such as

elective contributions to a section 401(k) cash or deferred

arrangement, or amounts contributed under a salary

reduction SEP agreement, or a SIMPLE IRA plan.

If the association provided taxable fringe benefits to its

employees, such as personal use of a car, do not deduct

as wages the amount allocated for depreciation and other

expenses claimed on lines 14 and 16.

Note: If the association claims a credit, if applicable, for

any wages paid or incurred, it may need to reduce any

corresponding deduction for salaries and wages. See

Reducing certain expenses for which credits are allowable

in the Instructions for Form 1120.

Line 10. Repairs and maintenance. Enter the cost of

repairs and maintenance not claimed elsewhere on the

return, such as labor and supplies, that are not payments

to produce or improve real or tangible personal property.

See Regulations section 1.263(a)-1. For example,

amounts are paid for improvements if they are for

betterments to the property, restorations of the property

(such as the replacements of major components or

substantial structural parts), or if they adapt the property

to a new or different use. Amounts paid to produce or

improve property must be capitalized. See Regulations

sections 1.263(a)-2 and (a)-3.

Line 11. Rents. If the association rented or leased a

vehicle, enter the total annual rent or lease expense paid

or incurred during the year. Also, complete Part V of Form

4562, Depreciation and Amortization. If the association

leased a vehicle for a term of 30 days or more, the

deduction for vehicle lease expense may have to be

reduced by an amount includible in income called the

inclusion amount. See the instructions for Line 16. Rents

in the Instructions for Form 1120 for the lease inclusion

amount.

Line 12. Taxes and licenses. Enter taxes paid or

accrued during the tax year, but not the following.

• Federal income taxes.

• Taxes not imposed on the association.

• Taxes, including state or local sales taxes, that are paid

or incurred in connection with an acquisition or disposition

of property (these taxes must be treated as a part of the

cost of the acquired property, or in the case of a

disposition, as a reduction in the amount realized on the

disposition).

• Taxes assessed against local benefits that increase the

value of the property assessed (such as paving, etc.).

• Taxes deducted elsewhere on the return.

See section 164(d) for information on apportionment of

taxes on real property between a seller and a buyer.

Line 13. Interest. The business interest expense

deduction may be limited for certain associations. The

Instructions for Form 8990, Limitation on Business Interest

Expense Under Section 163(j), explain when a business

interest expense deduction is limited, who is required to

file Form 8990, and how certain businesses may elect out

Instructions for Form 1120-H (2025)

of the business interest expense limitation. See Form

8990 and its instructions for details.

Line 14. Depreciation. Include on line 14 depreciation

and the cost of certain property that the association

elected to expense under section 179 from Form 4562.

Attach Form 4562. See the Instructions for Form 4562.

Line 15. Other deductions. Attach a statement, listing

by type and amount, all allowable deductions that are not

deductible elsewhere on Form 1120-H. Enter the total on

line 15.

Line 16. Total deductions. Expenses, depreciation, and

similar items must not only qualify as items of deduction,

but must also be directly connected with the production of

gross income (excluding exempt function income) to be

deductible in computing taxable income.

Line 20. Multiply the amount on line 19 (taxable income)

by 30% (0.30) (timeshare associations multiply line 19 by

32% (0.32)). If the amount on line 19 is zero or less than

zero, enter -0- on line 20.

Line 21. Tax credits. The association may qualify for the

following tax credits.

• Foreign tax credit (Form 1118).

• General business credit (Form 3800).

Note: In general, homeowners associations cannot claim

the investment credit. However, homeowners associations

can make an elective payment election under section

6417 for the investment credits under sections 48, 48C,

and 48E. See the instructions for line 23f, later.

Enter the total applicable credits on line 21 and attach

the appropriate form(s).

Line 22. Total tax. If the association must recapture any

low-income housing credit, qualified electric vehicle credit,

new markets credit, or recapture excessive payments from

Form 4255, include the amount of the recapture in the

total for line 22. To the right of the entry space, enter

“LIHTC,” “QEV,” or “NMTC”; “recapture”; and the amount.

For details, see Form 4255, Certain Credit Recapture,

Excessive Payments, and Penalties; Form 8611,

Recapture of Low-Income Housing Credit; Regulations

section 1.30-1 (regarding the qualified electric vehicle

credit); Form 8874, New Markets Credit; or Form 8874-B,

Notice of Recapture Event for New Markets Credit.

Line 23b. Estimated tax payments. Enter any

estimated tax payments the association made for the

current tax year.

Line 23d. Credit from Form 2439. Enter any credit from

Form 2439, Notice to Shareholder of Undistributed

Long-Term Capital Gains, for the association’s share of

the tax paid by a RIC or a real estate investment trust

(REIT) on undistributed long-term capital gains included in

the association’s income. Attach Form 2439.

Line 23e. Credit for federal tax on fuels. Enter the total

income tax credit claimed on Form 4136, Credit for

Federal Tax Paid on Fuels. Attach Form 4136.

Line 23f. Elective payment election amount from

Form 3800. Enter on line 23f the total net elective

payment amount from Form 3800, Part III, line 6, column

(j). See the Instructions for Form 3800.

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Line 23g. Total payments and credits. Add the

amounts on lines 23a through 23f and enter the total on

line 23g.

Backup withholding. If the association had income tax

withheld from any payments it received because, for

example, it failed to give the payer its correct EIN, include

the amount withheld in the total for line 23g. This type of

withholding is called backup withholding. Show the

amount withheld in the blank space in the right-hand

column between lines 22 and 23g, and enter “Backup

Withholding.”

Line 24. Amount owed. Generally, the association must

pay any tax due in full no later than the due date for filing

its tax return (excluding extensions). Payment of the tax

due must be made electronically. See Electronic deposit

requirement, earlier, for the payment options for the

association. Also, go to IRS.gov/Payments for more

detailed information.

If you can’t pay the full amount of tax you owe, you can

apply for an installment agreement online.

You can apply for an installment agreement online if:

• You can’t pay the full amount shown on line 24,

• The total amount you owe is $25,000 or less, and

• You can pay the liability in full in 24 months.

To apply using the Online Payment Agreement

Application, go to IRS.gov/OPA. Under an installment

agreement, you can pay what you owe in monthly

installments. There are certain conditions you must meet

to enter into and maintain an installment agreement, such

as paying the liability within 24 months and making all

required deposits and timely filing tax returns during the

length of the agreement. If your installment agreement is

accepted, you will be charged a fee and you will be

subject to penalties and interest on the amount of tax not

paid by the due date of the return.

Line 25. Overpayment. If there is an overpayment on

line 25, enter the amount the association wants refunded

on line 26b. See the instructions for line 26b, later. The

association can also choose to have all or part of the

overpayment credited to next year's estimated tax by

completing line 26a. See the instructions for line 26a, next.

Line 26a. Credited to estimated tax. The association

can elect to apply all or part of the association's

overpayment to next year's estimated taxes.

Enter the amount of any overpayment that should be

applied to next year's estimated tax.

This election to apply some or all of the overpayment

amount to the association's 2026 estimated tax cannot be

changed at a later date.

Line 26b. Refunded. Enter the amount to be refunded to

the association on line 26b. If the association has access

to U.S. banking services, it should use direct deposit for

any refunds, whenever possible.

The benefits of a direct deposit include a faster refund,

the added security of a paperless payment, and the

savings of tax dollars associated with the reduced

processing costs.

Direct deposit of refund. If the association wants its

refund directly deposited into its checking or savings

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account at any U.S. bank or other financial institution,

complete lines 26c through 26e. See the instructions for

lines 26c, 26d, and 26e, later.

To have your refund direct deposited, you must

complete lines 26c through 26e.

The association is not eligible to request a direct

deposit if:

• The receiving financial institution is a foreign bank or a

foreign branch of a U.S. bank, or

• The association has applied for an EIN but is filing its

tax return before receiving one.

Line 26c. Routing number. The routing number must be

nine digits. The first two digits must be 01 through 12 or 21

through 32.

Ask the association’s financial institution for the correct

routing number to enter on line 26c if:

• The routing number on a deposit slip is different from

the routing number on your checks,

• Your deposit is to a savings account that doesn't allow

you to write checks, or

• The association's checks state they are payable

through a financial institution different from the one at

which the association has its checking account.

Line 26d. Type of account. Check the appropriate box

for the type of account. Don't check more than one box.

The association must check the correct box to ensure the

deposit is accepted.

Line 26e. Account number. The account number can

be up to 17 characters (both numbers and letters). Include

hyphens but omit spaces and special symbols. Enter the

number from left to right and leave any unused boxes

blank.

If the direct deposit to the association’s account is

different from the amount you expected, the association

will receive an explanation in the mail about 2 weeks after

the refund is deposited.

Conditions resulting in a refund by check. If the IRS is

unable to process the request for a direct deposit, a refund

by check will be generated instead. Reasons for not

processing a request include:

• The name of the association on the tax return does not

match the name on the account.

• The financial institution rejects the direct deposit

because of an incorrect routing or account number.

• The association fails to indicate the type of account the

deposit is to be made to (that is, checking or saving).

Note: The IRS isn’t responsible for a lost refund if the

association enters the wrong account information. Check

with the association’s financial institution to get the correct

routing and account numbers and to make sure the direct

deposit will be accepted.

Paperwork Reduction Act Notice. We ask for the

information on this form to carry out the Internal Revenue

laws of the United States. You are required to give us the

information. We need it to ensure that you are complying

with these laws and to allow us to figure and collect the

right amount of tax.

You are not required to provide the information

requested on a form that is subject to the Paperwork

Instructions for Form 1120-H (2025)

Reduction Act unless the form displays a valid OMB

control number. Books or records relating to a form or its

instructions must be retained as long as their contents

may become material in the administration of any Internal

Revenue law. Generally, tax returns and return information

are confidential, as required by section 6103.

The time needed to complete and file this form will vary

depending on individual circumstances. The estimated

burden for business taxpayers filing this form is approved

under OMB control number 1545-0123 and is included in

the estimates shown in the instructions for their business

income tax return.

Instructions for Form 1120-H (2025)

If you have comments concerning the accuracy of the

time estimates or suggestions for making this form

simpler, we would be happy to hear from you. You can

send us comments from IRS.gov/FormComments. Or, you

can write to the Internal Revenue Service, Tax Forms and

Publications Division, 1111 Constitution Ave. NW,

IR-6526, Washington, DC 20224. Do not send the tax

form to this office. Instead, see Where To File, earlier.

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