Although homeowner associations are created as nonprofit corporations, this does not mean the associations do not engage in financial transactions or require the services of a certified public accountant (CPA). For example, it is common for an association’s governing documents to require a financial audit or review on an annual basis, and associations are required to file tax returns every year. Further examples of situations in which it may be beneficial to consult a CPA include:
Q: We purchased a vacant lot in western North Carolina in 1998, and since we were the first buyers in the community, we had the developer write some covenants and restrictions (CCRs).
The CCRs are simple: no chain-link fences, no...
Assocations must file!
While the end of the year traditionally means a congested calendar and a lengthy to-do list for most people, Associations also face another important year-end activity: preparing to file federal – and, in some cases, state-tax forms.
The question of including painting in reserves continues to arise, even 15 years after the matter should have been settled. To understand why, you need to know that this issue first arose from tax considerations,
not because of any budget, maintenance, or economic factors. Painting is one of the largest expenditures that most condominium associations will incur. The primary purpose for establishing reserves is to assure funding is available for major repairs and replacements that do not occur on an annual basis. Consequently it is logical that it should be included in reserves because it is not an annual maintenance expense. For most associations painting will occur every 7 to 15 years.