Where do you deduct HOA fees for rental property?

[TomK · Accepted solution]

You can deduct your rental property HOA fees under Other expenses (Schedule E, Line 19).

[caskydiver]

Can I prepay 2020 HOA dues for a rental home in 2019 and take the deduction this year instead of in 2020?

[Critter]

You can but you will lose that deduction next year so what will you really gain?   And there are rules to follow:    https://www.nolo.com/legal-encyclopedia/rules-deducting-prepaid-business-expenses.html

[caskydiver]

This will be a high income year, but next year will not be so I am trying to push as much deductions on income into this year as possible.  Won't need them next year.

[Carl]

This will be a high income year,

Do you have a mortgage on the rental property? If you do, chances are "EXTREMELY" unlikely that you will actually show a profit on that rental income. In fact, it's "rare" for rental property to "ever" show a taxable income on paper at tax filing time - particularly if there's a mortgage on the property.

[Anonymous]

what Carl is saying is that with high income, if the rental property loses money, that loss will not be deductible in 2019 so there would be no benefit in prepaying the expenses.    rental activities are by law passive so if your modified adjusted gross income is above $150,000 the passive loss will not be allowed but would have to be carried forward to 2020,     

of course if it's profitable, the income will be taxable.

[Loui1]

Okay, but how can I add it as TurboTax does not show the "extras" (line 19) as an option. Instead, it recommends adding it to line 7?

[ajgmistle]

@Loui1 Help! TurboTax has always guided me to put the HOA fees under line 7.  Now a lender for a loan on another property, won't acknowledge Line 7 as HOA Fees which is completely messing up the profit/loss calculation to get my other loan.  Can you guide me WHERE you found that same guidance I had?  I'm spinning in circles and can't find it!!

[Critter-3]

The HOA fees could be entered on any of the lines on the Sch E ... most  common would be lines 7, 10,11 or 19.   Not sure why they will not allow the valid deduction so I would get proof of HOA payments that match the amount reported to show that even if it is not on the line they want it to be it is still a valid deduction. 

Be aware that  mortgage brokers are not tax preparers  and they usually use a standard  "check list" to gather the info for the  underwriter so if the amount is not on the line they expect it to be on then they are easily confused so either  educate them or ask to talk to their supervisor  OR  find another mortgage company to deal with.   

[Critter-3]

FYI ... here is the screen in TT :

Note that the Sch E instructions has general instructions only for lines 5 - 21  so you have the options on which line some items may be entered on  ... only a few are specific line mort int, insurance, taxes, etc. 

https://www.irs.gov/pub/irs-pdf/i1040se.pdf