Buying an Apartment in Santa Clarita, CA: How HOAs Affect Cost
You’ve done it! You’ve found the perfect apartment in the perfect neighborhood. Maybe you love the upscale, family-friendly feel of Valencia or the historic district of Newhall is more your speed. No matter where you’re house hunting in Santa Clarita, California, though, you may run into HOA fees. Homeowners’ association fees, or HOA fees, tend to be polarizing. They either bring to mind thoughts of perfectly manicured communities or the frustrations of not being able to paint your door a specific color or park your car where you’d like.
Who Regulates HOAs in California?
You may encounter several rules when you join an HOA, which can vary. But some laws oversee all HOAs—on the federal and state level. Most importantly, no rules set forth by a Declaration of Covenants, Conditions, and Restrictions (CC&R) can supersede applicable constitutional, federal, or state laws.
Ever since it was passed in 1985, the Davis-Stirling Common Interest Development Act has played a significant role in the governance of homeowners’ associations in California. This statute sets forth the standards for board meetings, board elections, budgeting, inspection, record keeping, and transfer of property interests.
Specifically, the law acknowledges a resident’s right to:
- Veto rule changes proposed by the board
- Peacefully assemble
- Display religious symbols or the U.S. flag
The Davis-Stirling Act also limits the power of HOAs to control:
- The rental of homes in the community
- Pet ownership
The Fair Housing Act, too, protects homeowners that live within an HOA.
Since its inception in 1968, homeowners’ associations may not take action to affect a person’s right to buy or rent real estate based on that person’s membership in a protected class.
What Does an HOA Fee Cover?
Although it can vary from association to association, there are several benefits that an HOA fee may cover.
Some costs that an HOA fee may cover include:
- Trash removal
- Security services
- Maintenance and repairs of common areas
- Lawn care and landscaping in common areas
- Access to amenities like pools or gyms
Ideally, a portion of your monthly HOA dues is set aside for reserve funds to address any emergencies such as a burst pipe in the clubhouse or roof repair for apartments or condominiums. Should this cost be more than is available, the association may turn to its members to help make up the difference.
HOA Dues Can Change
When you’re budgeting for a new home, it’s important to consider the potential fluctuations of HOA fees. Although Redfin or Zillow may list a specific dollar amount in the description, the association can change that monthly cost based on inflation, emergency repairs, or large projects. In fact, California civil code states that HOAs in California may raise dues up to 20% without approval from their members.
The fluctuations in HOA dues can affect your monthly payments, but they may also call for more extensive, one-off payments called special assessments. Your HOA may require a special assessment for emergencies that need immediate funding, adding an additional cost of several hundred or thousands of dollars.
Can You Refuse to Join a Homeowners Association?
If you have found a home within a community run by an HOA, buying or renting it requires you to sign the paperwork acknowledging that you will pay your dues and adhere to the rules set forth by the CC&R. If you miss a payment, you will receive a warning and may be subject to late fees. If the payment is 30 days late, your HOA privileges may be suspended. Should you continuously fail to pay, the association can either file a lien against your property, pursue a lawsuit, or force you into foreclosure.
Are HOA Fees Tax-Deductible?
The answer can vary based on the use of the home in the HOA. If you live on the property year-round, the homeowners’ association fees cannot be deducted from your taxes because the home, condo, or apartment is considered your primary residence. However, if you rent out the property, the fees may be tax-deductible. This also applies to homeowners who use their space for a business or a part-time or vacation home.
The IRS views the HOA dues as a necessary expense to maintain the property. Therefore the fee—or any percentage representing the portion of your space that has been rented out—is eligible for tax deduction. Special assessments, however, are not commonly deductible unless they are used for necessary (read: not cosmetic) repairs or maintenance. To reap these benefits if you rent any part of your home or condo in an association, be sure to file a Schedule E form with your taxes each year.
These are among the many reasons it’s essential to understand the rules and regulations of the HOA you are considering joining. There are several benefits to be gained by buying a home, condominium, or apartment within an association. You can maximize these benefits by doing the research before submitting an offer.
Are you considering purchasing a home in Santa Clarita that lies within a homeowners’ association? Don’t hesitate to contact the professional Santa Clarita movers at Affordable Quality Moving and Storage to help you navigate the first steps of homeownership. Whether you’re interested in moving across the street or across the country, we can help. We also serve Burbank, Temecula, San Diego, and all of Southern California.