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10

Taxation Rate

The portion of the annual accrued Interest in the reserve account that is submitted to the government.   

Taxation rates only apply in certain jurisdictions and form part of the economic/financial context of organizations. For example, in the US, HOAs can file one of the following forms:

  • 1120 (15%)- carries  higher tax risk.
  • 1120-H (30%)

The challenge is to confirm the reserves that are being considered as capital contributions for tax purposes. Capital contributions are excluded from income.

In the US, painting is not considered a capital activity but rather a non-annual maintenance activity.


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