Anonymous from New Haven County, Connecticut writes:
Dear Mister Condo,
Mister Condo replies:
I know better than to tackle an accounting question without checking in with one of my expert friends. I reached out to my friend Sam Tomasetti, CPA of Tomasetti, Kulas & Company, P.C. for his advice. Here’s what he had to say:
Except for very unusual circumstances, tax law requires that interest income earned on funds held by qualifying homeowners associations be subject to tax no matter how much or little income is earned. However, tax law also allows a 100% statutory exemption and the ability to offset the cost of earning income with the income. Simply stated the tax is calculated on net income not gross income.
I hope that helps! All the best!