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Official form guide
Form 1120H: U.S. Income Tax Return for Homeowners Associations
IRS Form 1120-H is the U.S. Income Tax Return for Homeowners Associations. It allows qualifying homeowners associations to elect section 528 treatment and exclude exempt function income from gross income. Taxable income is taxed at a flat 30% rate for condominium and residential real estate management associations, and 32% for timeshare associations. The form must be filed by the due date of the income tax return, including extensions.
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IRS Form 1120H - U.S. Income Tax Return for Homeowners Associations
IRS Form 1120-H is the U.S. Income Tax Return for Homeowners Associations. It allows qualifying homeowners associations to elect section 528 treatment and exclude exempt function income from gross income. Taxable income is taxed at a flat 30% rate for condominium and residential real estate management associations, and 32% for timeshare associations. The form must be filed by the due date of the income tax return, including extensions.
Risk Radar
Scan points- 1Filing late can cause loss of the right to elect Form 1120-H treatment.
- 2Failing to attach Schedule D (Form 1120) when reporting capital gains on line 5
- 3Reporting tax-exempt interest on line 2 instead of item E
- 4Using the wrong tax rate (30% for condominium/residential, 32% for timeshare)
- 5Not making the section 528 election by the due date, losing the right to file Form 1120-H
Plain English
Homeowners associations use Form 1120-H to pay tax on their income at a flat rate. They can leave out certain income from taxes, like membership dues used for common expenses. The association must choose to use this form each year by the tax return deadline. If they file late, they may lose the right to use this special tax treatment.
Submission Date
- Filing date: 2026-01-16 16:10:36
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when the association elects section 528 treatment and meets the 60% gross income test and 90% expenditure test.
- Do not use it when the association does not meet the exempt function income requirements or does not elect section 528 treatment.
Form selector
Use this form or another form?
Changing address after filing
To notify IRS of new address after return filed
✓ Confirm address change occurred after filing.
Reporting capital gains and losses
Must attach to Form 1120-H for every sale or exchange of capital asset
✓ Ensure all sales reported even if no gain or loss.
Claiming depreciation or section 179 expense
Required to claim depreciation or expense election
✓ Attach to Form 1120-H and see Instructions for Form 4562.
Claiming credit for federal tax on fuels
To claim income tax credit for fuel taxes paid
✓ Attach to Form 1120-H and ensure fuel tax was paid.
Elective payment election from Form 3800
Enter net elective payment amount on line 23f
✓ See Instructions for Form 3800.
Deadline or filing window
The return is due by the due date of the association's income tax return, including extensions. For a short tax year ending in June, the due date is the 15th day of the 3rd month after the end of the tax year (e.g., September 15 for a short year ending June 30). An extension of time to file may be available, but details are not provided in the source.
Checklist
What you need before filling it out
Item B (60% gross income test)
Exempt function income calculation · Association's income records
Item C (90% expenditure test)
Expenditure records for exempt purposes · Association's expense records
Line 1 (Exempt function income)
Records of membership dues, fees, etc. · Association's financial statements
Line 5 (Capital gain net income)
Schedule D (Form 1120) · Broker statements, asset sale records
Line 9 (Salaries and wages)
Payroll records, W-2s · Payroll system
Line 13 (Interest)
Interest expense records, Form 8990 if applicable · Loan statements
Line 23b (Estimated tax payments)
Payment records, canceled checks · Association's payment history
Before you submit
- 1Verify the association's name and address are correct; check boxes for name or address change if applicable.
- 2Confirm that at least 60% of gross income is exempt function income (Item B).
- 3Confirm that at least 90% of expenditures are for exempt purposes (Item C).
- 4Attach Schedule D (Form 1120) if the association had any capital asset sales or exchanges.
- 5Attach Form 4562 if claiming depreciation or section 179 expense.
- 6Attach Form 4797 if reporting net gain or loss from property sales.
- 7Attach Form 4136 if claiming credit for federal tax on fuels.
- 8Attach Form 3800 if claiming elective payment election amount.
- 9Enter estimated tax payments on line 23b and attach Form 2439 if applicable.
- 10Sign and date the return; keep a copy for records.
How to file this form
- 1Gather all income and expense records for the tax year, including membership dues, fees, interest, rents, royalties, and capital asset sales.
- 2Complete Part I (Income) lines 1 through 7, reporting exempt function income on line 1 and other income on lines 2-7.
- 3Complete Part II (Deductions) lines 9 through 15, including salaries, repairs, taxes, interest, depreciation, and other deductions.
- 4Complete Part III (Tax Computation) lines 16 through 22 to calculate the tax due.
- 5Complete Part IV (Payments and Credits) lines 23a through 23f, entering estimated tax payments and any credits.
- 6Attach all required schedules and forms (Schedule D, Form 4562, Form 4797, etc.), sign the return, and mail it to the appropriate IRS address.
Known limitations
- 1Do not offset interest expense against interest income; report them separately.
- 2Do not report tax-exempt interest on line 2; include it in item E instead.
- 3Do not include exempt function income on line 7 (other income).
- 4If the association provided taxable fringe benefits to employees, do not deduct as wages the amount allocated for depreciation and other expenses claimed on lines 14 and 16.
- 5The business interest expense deduction may be limited for certain associations; check if Form 8990 is required.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is the 2025 Instructions for Form 1120-H. The IRS provides a 'Future Developments' page at IRS.gov/Form1120H for updates after publication. A notable change is the increase in the penalty for failure to file: for returns required to be filed in 2026, the minimum penalty for a return over 60 days late is increased to the smaller of the tax due or $525.
What changed or needs a fresh check
- Edition date — confirm the form revision is 2025 (20/25).
- Penalty — note that for returns due in 2026, the minimum penalty for failure to file over 60 days late is $525 or the tax due, whichever is smaller.
- Electronic payments — consider using direct deposit for refunds and electronic payment for payments if the association has access to U.S. banking services.
- Mailing address — not stated in the official source excerpt — verify the correct IRS address for your state on the agency site.
- Signature — not stated in the official source excerpt — verify signature requirements on the form or agency site.
- Amended return — if correcting a prior return, check the 'Amended return' box on the form.
Quick Facts
Downloads
After you file
- 1Retain a copy of the filed return and all attachments for at least 3 years.
- 2If the association's address changes after filing, use Form 8822-B to notify the IRS.
- 3If an error is discovered, file an amended Form 1120-H with the 'Amended return' box checked.
- 4Monitor for any IRS correspondence or refund checks; if direct deposit was elected, verify the refund is deposited.
- 5Keep supporting documentation for any credits claimed (e.g., Form 4136, Form 3800) in case of an audit.
Sources
- SRCInstructions p.1 — penalty for failure to file increased to $525 for returns due in 2026.
- SRCInstructions p.6 — at least 60% of gross income must be exempt function income (Item B).
- SRCInstructions p.6 — do not offset interest expense against interest income.
- SRCInstructions p.6 — attach Schedule D (Form 1120) for capital gains.
- SRCInstructions p.7 — enter estimated tax payments on line 23b.
- SRCInstructions p.7 — attach Form 4136 for fuel credit.
- SRCInstructions p.7 — attach Form 3800 for elective payment election.
- SRCInstructions p.9 — address for Tax Forms and Publications Division, but do not send tax form there.
Common confusion points
What is exempt function income?
The term is defined earlier in the instructions, but filers may confuse it with other income.
→ Review the Definitions section in the instructions to identify qualifying income.
How do I calculate the 60% test?
The test requires at least 60% of gross income to be exempt function income.
→ Sum all exempt function income and divide by total gross income; ensure the result is at least 60%.
Can I offset interest expense against interest income?
The instructions explicitly state not to offset.
→ Report interest income on line 2 and interest expense on line 13 separately.
Do I need to report tax-exempt interest?
Tax-exempt interest is not reported on line 2 but must be included in item E.
→ Check item E for total tax-exempt interest.
What if I have no capital gains?
Even if no gain or loss, every sale or exchange must be reported on Schedule D.
→ Attach Schedule D even if no gain or loss.
How do I handle multiple items of other income?
List the type and amount on an attached statement.
→ If only one item, describe it in parentheses on line 7.
When do I need to file Form 8990?
If the association's business interest expense deduction is limited under section 163(j).
→ Review the Instructions for Form 8990 to determine if filing is required.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 1120-H (amended) — file corrected return with 'Amended return' box checked.
Questions about IRS Form 1120H
What is IRS Form 1120H used for?
Homeowners associations use Form 1120-H to pay tax on their income at a flat rate. They can leave out certain income from taxes, like membership dues used for common expenses. The association must choose to use this form each year by the tax return deadline. If they file late, they may lose the right to use this special tax treatment.
Who must file IRS Form 1120H?
Homeowners associations that elect to be treated as a section 528 organization must file Form 1120-H. The election is made separately for each tax year by filing a properly completed return.
What information does IRS Form 1120H require?
Form 1120-H collects income information including gross rents (line 3), gross royalties (line 4), capital gain net income (line 5, with attached Schedule D), and net gain or loss from Form 4797 (line 6). Tax-exempt interest is reported on item E, not on line 2. The form also includes deductions and tax computation.
When is IRS Form 1120H due?
Form 1120-H must generally be filed by the due date of the association's income tax return, including extensions. For a short tax year ending in June, the return is due by the 15th day of the 3rd month after the end of the tax year (treated as ending June 30). If the due date falls on a weekend or legal holiday, the next business day applies.
Where do I file IRS Form 1120H?
The official instructions direct filers to the 'Where To File' section for the mailing address; no specific address is provided in the source excerpts. For deliveries using a private delivery service (PDS), use the address at IRS.gov/PDSStreetAddresses. Do not send the form to the Tax Forms and Publications Division.
How do I complete IRS Form 1120H?
Complete Form 1120-H by entering income on lines 2 through 6, including gross rents, royalties, capital gains (attach Schedule D), and net gains from Form 4797. Report tax-exempt interest on item E. Deduct allowable expenses on the appropriate lines. The association must sign and date the return before mailing it to the correct address.
What happens if IRS Form 1120H is filed incorrectly?
Failure to file by the due date may result in a penalty of 5% of the unpaid tax per month, up to 25%, with a minimum of $525 if over 60 days late. Additionally, the association may lose the right to elect Form 1120-H treatment for that tax year. Interest also accrues on unpaid penalties.
What is exempt function income?
The term is defined earlier in the instructions, but filers may confuse it with other income. Review the Definitions section in the instructions to identify qualifying income.
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