1. What are HOA fees, and what do they cover?
HOA fees are what you pay to your homeowner association. They’re usually collected monthly and may go toward the following:
- Common areas and building maintenance: Most fees pay for the upkeep of your community. In addition to lawn care and landscaping, HOA fees often cover the cost of maintaining indoor common areas, fitness gyms, playgrounds, tennis courts and swimming pools.
- Insurance: If liability insurance covers communal spaces or flood insurance is required, HOA fees may go toward these policies.
- Reserve fund: Part of your monthly HOA fee is usually set aside for renovations, such as replacing a roof or emergency repairs, like fixing burst pipes. If your HOA doesn’t have enough in its reserve fund to cover the cost of unexpected expenses, the HOA board may also levy a one-time HOA assessment.
- Security: Fees may go toward extra security measures like security guards, surveillance cameras or auto-locked entrances.
- Utilities: Common utilities that HOA fees may cover are trash removal, recycling, gas, water and sewer.
2. What’s not covered by HOA fees?
Understanding what’s not covered by HOA fees is helpful when determining your homeownership budget. For example, home insurance won’t be included, and neither will property taxes. But what about your utilities? Sometimes HOA fees will pay for basic utilities like water, sewer and garbage disposal. If your goal is to purchase a home you can afford to buy and keep, consider the impact of all expenses not covered by HOA fees.
3. Are HOA fees tax deductible?
According to the IRS, if you purchase property as your primary residence, you cannot deduct homeowner association fees, condominium association fees or common charges. However, if your property is used for rental purposes, you may be able to deduct expenses related to management and maintenance.
4. What are typical HOA fees by type of community?
There is no typical HOA fee—they can range from a few hundred to a few thousand dollars. The location, type of home and amenities all affect how much you’ll pay. iPropertyManagement.com found that a single-family home’s average monthly HOA membership fee is $250. Condominiums and common-interest communities pay an average of $170. Metro New York has the highest HOA fees, and Nashville, Tenn. has the lowest.
5. What if I can’t pay my HOA fees?
If you can no longer afford your HOA fees, meet with your board before missing a payment. Falling too far behind can lead to steep penalties, including late fees, a lien on your property or even foreclosure.