Can I deduct HOA fees from my taxes?

[Annette Hala]

I was discussing buying a house vs. a condo as a rental with someone the other day. I was saying that a condo wasn't a good option because the HOA really cuts into cash flow. They asked if I couldn't deduct HOA fees from my taxes. Can you?

[Jon Holdman]

Yes, you can deduct the HOA fees for a rental from your rental income.

But the more fundamental problem is that HOA fees can really drive up your costs. Hopefully you've read about the "50% rule" in the rental property forum. With a badly run, underfunded HOA, your expenses can be even higher.

Plus, you'll always have a disinterested, but interfering partner for your rental.