HOA reserve maximums?

[Hathaway]

What is the name of your state (only U.S. law)? NY.

Hi, I am the new treasurer of a small HOA, which hasn't been run very professionally. We have a small amount in "reserve". I have 3 questions: Is this money required to be in a separate account? Currently it's just in with our operating money in our primary checking account, but I would be more comfortable if it was actually kept separate, not just separate in the books. 2nd question: some members have heard that there's a cap on the amount allowable to be kept in reserve, to preserve our tax-exempt status. Where can I find out if there is a cap in NYS. 3rd question: past Boards have never filed any tax forms since there has been no income from the reserve fund. I think we should be filing 1120H since we are a business entity, regardless if there's income or not.

Thanks for any help!What is the name of your state (only U.S. law)?

[HomeGuru]

Originally Posted by Hathaway

What is the name of your state (only U.S. law)? NY.

Hi, I am the new treasurer of a small HOA, which hasn't been run very professionally. We have a small amount in "reserve". I have 3 questions: Is this money required to be in a separate account? Currently it's just in with our operating money in our primary checking account, but I would be more comfortable if it was actually kept separate, not just separate in the books.

**A: yes, it is general practice to have 2 accounts: one for operating and one for reserve funds.


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2nd question: some members have heard that there's a cap on the amount allowable to be kept in reserve, to preserve our tax-exempt status. Where can I find out if there is a cap in NYS.


**A: there is no cap since all condo properties have different reserve requirements.



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3rd question: past Boards have never filed any tax forms since there has been no income from the reserve fund. I think we should be filing 1120H since we are a business entity, regardless if there's income or not.

Thanks for any help!What is the name of your state (only U.S. law)?

**A: I agree that tax returns should be filed.

[Hathaway]

Good, I've already started to separate the accounts, and will file the tax form. Thanks for your help.

[HomeGuru]

Originally Posted by Hathaway

Good, I've already started to separate the accounts, and will file the tax form. Thanks for your help.

**A: for more info go to [url]www.caionline.org[/url]