topic Investment property HOA special assessment hurricane damage in Investors & landlords

Investment property HOA special assessment hurricane damage

brcrump — Sat, 12 Feb 2022 21:48:18 GMT

We rent the condo 100% and file Schedule E. HOA charged large special loss assessments after Hurricane Sally, due to insurance not covering all damages. In litigation with insurance, had to pay for repairs with large assessments.

1. No improvements above and beyond damage, so not Capital Improvement, right?

2. I cannot claim as "qualified disaster loss" because it's not personal use property, right?

3. Because rental and not personal use property, can I file this under Form 4684 Casualty Loss at all?

4. Is it considered a Repair since it restored the building?

I just really don't know how to treat the assessment, please advise.

Re: Investment property HOA special assessment hurricane damage

AnnetteB6 — Sun, 13 Feb 2022 14:32:24 GMT

Since the amount in question is a special assessment charged by your HOA, you could enter it into your Schedule E a couple of different ways.

Since it did restore the building, you could enter it as a repair expense. Or, enter it as a Miscellaneous expense where you will be able to give it a description (such as 'special assessment') and the amount.

Re: Investment property HOA special assessment hurricane damage

brcrump — Sun, 13 Feb 2022 17:37:30 GMT

Interesting. So it definitely IS a deductible expense in full for this tax year?

Re: Investment property HOA special assessment hurricane damage

PattiF — Sun, 13 Feb 2022 20:56:42 GMT

Yes, you can deduct the full amount this tax year. This could be added to the Repair expenses.