[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: 26CFR1.528-2]

[Page 236]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.528-2  Organized and operated to provide for the acquisition, 
construction, management, maintenance and care of association property.

    (a) Organized and operated--(1) Organized. To be treated as a 
homeowners association an organization must be organized and operated 
primarily for the purpose of carrying on one or more of the exempt 
functions of a homeowners association. For the purposes of section 528 
and these regulations, the exempt functions of a homeowners association 
are the acquisition, construction, management, maintenance, and care of 
association property. In determining whether an organization is 
organized and operated primarily to carry on one or more exempt 
functions, all the facts and circumstances of each case shall be 
considered. For example, when an organization provides in its articles 
of organization that its sole purpose is to carry on one or more exempt 
functions, in the absence of other relevant factors it will be 
considered to have met the organizational test. (The term articles of 
organization means the organization's corporate charter, trust 
instruments, articles of association or other instrument by which it is 
created.)
    (2) Operated. An organization will be treated as being operated for 
the purpose of carrying on one or more of the exempt functions of a 
homeowners association if it meets the provisions of Sec. Sec. 1.528-5 
and 1.528-6.
    (b) Terms to be interpreted according to common meaning and usage. 
As used in section 528 and these regulations, the terms acquisition, 
construction, management, maintenance, and care are to be interpreted 
according to their common meaning and usage. For example, maintenance of 
association property includes the painting and repairing of such 
property as well as the gardening and janitorial services associated 
with its upkeep. Similarly, the term construction of association 
property includes covenants or other rules for preserving the 
architectural and general appearance of the area. The term also includes 
regulations relating to the location, color and allowable building 
materials to be used in all structures. (For the definition of 
association property see Sec. 1.528-3.)

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