Do you have a homeowners’ association at your fly-in community / residential airpark? Do you accumulate funds for future major projects like repaving the runway? How does the IRS or state treat your association for tax purposes? Are there questions about the amount of cash in your account at the end of your fiscal year?
One airpark association asks for help in filing an income tax return because they have been told that funds in an association at the end of the year is treated as profit by the IRS.
Here’s what they write:
“We need someone to advise us on the rules and all the filing information. I have consulted accountants, however, am not finding anyone that is knowledgeable on airparks.
“Savings for a home owners association? From the research I have done, it appears the government does not want a homeowners’ association to have money in their account at the end of the year. They typically need money for pools, grounds, items that can be paid in full with one year of dues. We need to carry over large amounts of money in order to resurface our runway in a few years. We also have to maintain our own streets, taxiways, etc., so we have to carry over and save funds for these expenditures.
“If you do have money in savings at the end of the year you are taxed highly on it!”
The association’s treasurer further comments that the IRS “is treating us the same as other non profit organizations and that’s why the high taxes for a large savings account! I was hoping that the government
might have realized that there are airparks out there and we are another category.”
The association spokesman says most homeowners’ associations would not have a large amount of money stashed at the end of the year unless they had to resurface their runway and maintain their own streets.
The airpark, because of these special needs, really aren’t like the typical homeowners’ association because of the need to accumulate around $250,000 to $300,000 for the runway in the next five years.
Have you had any experiences in this situation? You can help by adding your comment.