Does a Public Improvement District tax qualify as a real estate tax? Here is a link on what the PID tax is for: https://tinyurl.com/rd7m8na

[ColeenD3]

Unfortunately, no.

Per the IRS:

Assessments for local benefits.

You can’t deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property

Why was the PID created: The PID was created to finance certain public improvements (roadway improvements and utility improvements) that are required for and provide specific benefits to property within the project.

[kendallm37]

Thank you for your reply.  While I was waiting for your response I did some google searches.  I found several realty or brokerage websites that stated that a PID does qualify.  One in fact actually sited the subdivision (Creeks of Legacy) we live in as an example of PID's that qualify for the deduction.  Would you mind looking at this site and helping me understand if they are in error?

[DaveF1006]

i looked at the bottom of the screen and it mentions that PID assessments are tax-deductible. I did try to research it through IRS documents and rulings and found no evidence to the contrary. Based from the multiple sources we researched and with no evidence to the contrary, I would treat this as a tax deductible expense.  

[kendallm37]

It seems to be a grey area.  Many of the realtor sites claim it as deductible, but the PID for our area was established to make roads, sidewalks, etc for our subdivision.  According to that rational, I believe they cannot qualify.  See this explanation here.

[LeonardS · Accepted solution]

Yes, you can deduct the special assessment if it was for maintenance and repairs. 

According to the IRS:

"...Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. If you can’t determine what part of the tax is for maintenance, repair, or interest, none of it is deductible.

Deductible real estate taxes generally don’t include taxes charged for local benefits and improvements tending to increase the value of your property. These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. You should increase the basis of your property by the amount of the assessment.

....".

[kendallm37]

Leonard,

I believe that is the key to the answer.  If the assessment was for maintenance and repairs than it can be deducted.  I contacted the PID administrator to ask that very question.  The response was "This is a capital PID and as a result its purpose is not for maintenance/repair of infrastructure."

Thank you all for the time and attention to the issue.  

[LeonardS]

You are most welcome.