[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.528-1]

[Page 235-236]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.528-1  Homeowners associations.

    (a) In general. Section 528 only applies to taxable years of 
homeowners associations beginning after December 31, 1973. To qualify as 
a homeowners association an organization must either be a condominium 
management association or a residential real estate management 
association. For the purposes of Section 528 and the regulations under 
that section, the term homeowners association shall refer only to an 
organization described in section 528. Cooperative housing corporations 
and organizations based on a similar form of ownership are not eligible 
to be taxed as homeowners associations. As a general rule, membership in 
either a condominium management association or a residential real estate 
management association is confined to the developers and the owners of 
the units, residences, or lots. Furthermore, membership in either type 
of association is normally required as a condition of such ownership. 
However, if the membership of an organization consists of other 
homeowners associations, the owners of units, residences, or lots who 
are members of such other homeowners associations will be treated as the 
members of the organization for the purposes of the regulations under 
section 528.
    (b) Condominium. The term condominium means an interest in real 
property consisting of an undivided interest in common in a portion of a 
parcel of real property (which may be a fee simple estate or an estate 
for years, such as a leasehold or subleasehold) together with a separate 
interest in space in a building located on such property. An interest in 
property is not a condominium unless the undivided interest in the 
common elements are vested in the unit holders. In addition, a 
condominium must meet the requirements of applicable state or local law 
relating to condominiums or horizontal property regimes.
    (c) Residential real estate management association. Residential real 
estate management associations are normally composed of owners of 
single-family residential units located in a subdivision, development, 
or similar area. However, they may also include as members, owners of 
multiple-family dwelling units located in such areas. They are commonly 
formed to administer and enforce covenants relating to the architecture 
and appearance of the real estate development as well as to perform 
certain maintenance duties relating to common areas.

[[Page 236]]

    (d) Tenants. Tenants will not be considered members for purposes of 
meeting the source of income test under section 528(c)(1)(B) and Sec. 
1.528-5. However, the fact that tenants of members of a homeowners 
association are permitted to be members of the association will not 
disqualify an association under section 528(c)(1) if it otherwise meets 
the requirements of section 528(c) and these regulations.

[T.D. 7692, 45 FR 26321, Apr. 18, 1980]