HOA fees deduction for investment property (Capital Expenditures only)

Forum|Forum|3 years ago
February 27, 2023
4 replies
8 views

I seem to be finding conflicting information on this question so any guidance would be appreciated.

My understanding is that a monthly HOA fee does NOT add to the adjusted basis of a property. I have been reading however that a 'portion' of this HOA fee can be added to the adjusted basis. If the monthly HOA is $500 and $100 is allocated for capital improvements (roofs, decks, driveways) would that $100 portion be considered a capital improvements and therefore added to the basis?

Thank you

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Bsch4477

Level 15

You can add to your cost basis your percentage of ownership of the cost of capital improvements as they are actually made but not what is merely allocated. What is allocated might be spent on something other than improvements such as legal for emergency repairs.

MinhT1

Level 15

Capital improvements are investments made by the HOA to increase the value of your property.

And they can be added to the cost basis of your property.

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Mike9241

Level 15

it's not when you pay those fees for budgetary purposes. it's when they are actually used for capital improvements.

Mike9241

camster3939Author

Level 2

Thanks everyone for the information! I've obtained the financials from my HOA and I'm trying to figure out what would be considered a capital expenditure. They provided me with a list of expenses along with the associated dollar amounts. Based on this list below, what would be considered a capital improvements? I would guess things like snow removal, trash removal, janitorial services would NOT be considered a capital improvement. But how about the others? Thanks again!

Maintenance and repairs

Pump / Lift stations

Janitorial services

Fire Hydrant maintenance

Landscaping

Waterfall maintenance

Irrigation

Gutter cleaning

Water/Sprinkler closets

Exterminating

Snow Removal

Trash removal