U. S. Business Income Tax Return

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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.

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:

Dec 2, 2025

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

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What’s New

• 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.

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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.

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.
2

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)

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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.

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.

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If facilities are used (or personnel are employed) for
both exempt and nonexempt purposes, see Regulations
section 1.528-10.
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.

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.

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.
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.
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.
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

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

Instructions for Form 1120-H (2025)

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

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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.

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.

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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.
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.
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.

Other Forms and Statements That
May Be Required

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.
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
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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
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

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.
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.

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
increase amounts from 50 to 99 cents to the next dollar.
For example, $8.40 rounds to $8 and $8.50 rounds to $9.
Instructions for Form 1120-H (2025)

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Paid Preparer Authorization

annually until you dispose of the investment. See the Form
8997 instructions.

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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

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
election is not made until the return is filed, Form 1120-H
provides lines for estimated tax payments and the
Instructions for Form 1120-H (2025)

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
creating it), address, and EIN on the appropriate lines.
Include the suite, room, or other unit number after the
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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.

crediting of overpayments against tax if estimated tax
payments or overpayments apply.

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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:
1. Salary for an association manager or secretary;
6

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)

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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.

Deductions

TREASURY/IRS AND OMB USE ONLY DRAFT

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.

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)

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.
7

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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.

of the business interest expense limitation. See Form
8990 and its instructions for details.

TREASURY/IRS AND OMB USE ONLY DRAFT
Line 23g. Total payments and credits. Add the
amounts on lines 23a through 23f and enter the total on
line 23g.

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
8

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)

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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.”

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
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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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)

9