Am I able to deduct this loss and if so, how do I go about doing it?
(I am assuming you have never ever ever reported this property on SCH E since you purchased it in 2021).
No. It's not deductible at all. Instead, it gets added to the cost basis of your property. For example, if you paid $100,000 for the condo in 2021, then paid a $60,000 special assessment in 2023, your cost basis on the property is now $160,000. This won't help you "right now". But it will definitely come into play for depreciation when/if you convert the property to a rental in 2024. It will also help you years from now when/if you sell the property.
