Are speecial assessments for the construction of city water and sewer system deductible on Sch A?

[minggay2019]

Our city constructed a city water and sewer systems for our area of the city and levied a special assessment which is reported on the Combined Tax Bill under the Ad-valorem section.   Can I deduct this on Sch A as real estate taxes?

[BMcCalpin]

It depends.

You normally cannot deduct a special assessment by a government on your property. However, if the taxing authority breaks it out, you can deduct the maintenance, repairs, or an interest charge for a local benefit for your property (but not the original construction).

Instead, the assessment is added to the basis of your house, so that, in theory, when you sell your house, the basis of the house has been increased so your gain is decreased.

See page A-3 at https://www.irs.gov/pub/irs-pdf/i1040sca.pdf and the more readable discussion at https://www.nolo.com/legal-encyclopedia/deducting-real-estate-taxes-on-your-home.html