Form AP-206 at a glance
What it is: Texas Application for Exemption - Homeowners' Associations is the application a nonprofit corporation that is a homeowners' association should use to request exemption from Texas franchise tax.
Where and when to file: You can submit your completed application along with required documentation by mail, fax, or email.
To receive a state franchise tax exemption as a homeowners' association, the association must be a nonprofit corporation organized and operated primarily to obtain, manage, construct and maintain the property in or of a residential condominium or residential real estate development that is legally restricted for use as residences. The property cannot be used for any commercial activity. Additionally, the individual resident owners of the lots, residences or residential units must have at least 51% voting control of the association.
What to bring and attach to Form AP-206
4a. If yes, provide a copy of the page found in the Articles of Incorporation, Declaration, or Bylaw, including any subsequent amendments, that cite the purpose.
Provide a list of the owners of each lot.
A filled-in Form AP-206 example: a homeowners' association with 120 lots
How to fill out Form AP-206, box by box
Corporation name
Enter the corporation name. For Texas corporations, name must match the official corporate name as on file with the Texas Secretary of State. For out-of-state corporations, name must match the official corporate name as filed in the home state of charter.
Name, address and daytime phone number of person submitting this application
Enter the name, address and daytime phone number of the person submitting this application: Name, Title, Firm or company name, Daytime phone (Area code and number), Extension, Address, City, State, ZIP code and Email address.
Texas taxpayer number and filing information
Enter the Texas taxpayer number.
For TEXAS corporations, enter the filing information issued by the Secretary of State: File number and File date (Month Day Year).
4. Corporation's purpose
Is the corporation's purpose to organize and operate primarily to obtain, manage, construct and maintain property in or of a residential condominium or residential real estate development? YES or NO.
The corporation will maintain proof that the condominium project or real estate development is legally restricted for use as residences, with no commercial use allowed, and will maintain proof that the collective resident owners of individual lots, residence or units control at least 51 percent of the votes of the corporation.
Items 5 to 7, number of lots/units
Enter the number of lots/units shown on the plat map for the real estate development.
Enter the number of lots/units owned by residential owners.
Enter the number of Lots owned by developers, builders, banks, investors, or other similar commercial parties. Items 6 and 7 must equal the total reported in Item 5.
7a. Provide the name of the declarant identified in the organization's Declaration.
9. Commercial activity
Does the real estate development engage in any commercial activity or have amenities for which non-residents can use for a fee? (examples: golf course, air strip, clubhouse, event venue) Check yes or no.
10. Different classes of votes
Does the Declaration provide for different classes of votes? Check YES or NO.
If YES, identify the members of each class identified in the declaration: CLASS A and CLASS B. List additional classes if necessary.
Number or percentage of votes each member is entitled to
Provide the number or percentage of votes each member is entitled to and provide a copy of the voting rights from the organizations' declaration.
Date the individual resident owners collectively gained voting control
Based on the information provided, enter the date (Month Day Year) the individual resident owners collectively gained voting control (at least 51 percent) of the association.
More rules for Form AP-206
The exemption for a homeowners' association is provided for in Section 171.082, Texas Tax Code, and more detailed information is available in Franchise Tax Rule 3.583.
The Comptroller processes applications in the order they are received. To establish claimed exemptions, the Comptroller may require additional information. After review of the material, the Comptroller will inform the organization in writing if it qualifies for exemption. The Comptroller, or an authorized representative of the Comptroller, may audit the records of an exempt organization at any time during regular business hours to verify the validity of the organization's exempt status.
TYPE OR PRINT. Do NOT write in shaded areas.
Federal tax exemption
Your organization has a federal tax exemption
Texas law also provides an exemption from franchise taxes for corporations exempted from the federal income tax under IRC Section 501(c)(2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25). If your organization has been granted federal tax exemption under one of the qualifying sections listed, your organization will be granted an exemption from Texas franchise tax, or sales and franchise tax, on the basis of the Internal Revenue Service (IRS) exemption, as required by state law. Organizations that qualify for state tax exemption based on the federal exemption are not exempt from hotel occupancy tax because the hotel occupancy tax law does not recognize any federal exemptions.
Common questions about Form AP-206
Where do I file it?
Mail: Texas Comptroller of Public Accounts Exempt Organizations Section P.O. Box 13528 Austin, Texas 78711 FAX: (512) 475-5862 Email: exempt.orgs@cpa.texas.gov
Where to get help with Form AP-206
The laws, rules and other information about exemptions are online at www.Comptroller.Texas.Gov/taxes/exempt.
Sources
[1] Form AP-206 (Rev.7-26/11), Texas Application for State Tax Exemption for Homeowners' Associations, Texas Comptroller of Public Accounts (the Official source link on this page).