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Taxing Situation – The Rules Are Changing for Condominium Unit Owners’ Organizations

November 23, 2009


Condominium unit owners’ organizations should be aware that on July 3, 2008 the Governor signed into law “An Act Relative to Tax Fairness and Business Competitiveness.*” This act takes effect in Massachusetts for tax years beginning January 1, 2009 relative to income and excise taxes.

As far as Condominium unit owners organizations are concerned, the act now makes unit owners’ organizations file as the same form of entity for Federal and Massachusetts income tax purposes. Prior to the enactment of this new law, condominium associations filed Federally as corporations and filed in Massachusetts as different business entities, (i.e. unincorporated associations, trusts, corporations, etc.,) depending upon the type of entity chosen for the unit owners’ organization. Under Federal law, unit owners’ organizations must file corporate tax returns, however the unit owners’ organization is offered certain protection and exemptions under the Internal Revenue Code, sections 277 and 528, which eliminate and/or lessen the tax implications with regard to “income” in the form of excess common fees and net worth.

Now, as a result of this new act, unit owners’ organizations will be taxed as corporations at the state level in Massachusetts. The implications to unit owners’ organizations are as follows:

You may read more at the link below.

* This law was repealed a week after this article was published.

by: Mark J. Beglane

November 23, 2009

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