taxes

Homeowners Associations (HOAs)

A qualifying homeowners association (HOA) must be a nonprofit corporation organized primarily to operate residential property. The individual owners must control at least 51 percent of the association's votes.

What kinds of exemptions is my homeowners association eligible for?

HOAs exempt from federal income tax under IRC Section 501(c)(2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25) are eligible for a franchise tax exemption. HOAs exempt under IRC Section 501(c)(3), (4), (8), (10) or (19) are also eligible for a sales tax exemption.

Otherwise, to receive a state franchise tax exemption, an HOA must

  • Be a nonprofit corporation organized and operated primarily to obtain, manage, construct and maintain the property in or of a residential condominium or residential real estate development
  • Have property that is legally restricted for use as residences (not used for any commercial activity)
  • Have individual owners of the lots, residences or residential units hold at least 51 percent voting control

A qualifying HOA must apply for exemption.

How do we apply for an exemption?

To apply for exemption, complete and submit Form AP-206, Texas Application for Exemption – Homeowners Associations (PDF) to the Comptroller's office. If your application is approved, we'll send a letter or email notification.

How do we use the exemption certificate?

When purchasing a taxable item, give the seller a properly completed exemption certificate (Form 01-339, Texas Sales and Use Tax Resale Certificate (PDF)) to document the exempt sale.

If a seller chooses not to accept an exemption certificate, ask the seller to provide a properly completed Assignment of Right to Refund so the organization can request a refund of the tax directly from the Comptroller.

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