If you are allowed to deduct the assessment, you will report the loss on Form 4684, Casualties and Thefts. Click the Search button located at the top right. Type Casualty Loss. Click Jump to Casualty Loss to report the loss on your tax return.
To claim the condo assessment as a casualty loss, the IRS states the deduction allowed "depends on whether the damaged property was owned by the homeowners association or by the individual members as tenants in common...
A casualty loss deduction is only allowed for losses from property owned by the taxpayer. If the common elements are not owned by individual members, but rather by the homeowners association, an individual member would not be entitled to a casualty loss deduction. A member's assessment for the replacement of a capital item, whether or not the item was damaged by a casualty, is in the nature of a contribution to the capital of the homeowners association and is not currently deductible by the member.
However, if the individual members of the homeowners association own the common elements as tenants in common, the individual members may be entitled to casualty loss deductions in proportion to each member’s interest in the damaged common elements."
Click this IRS link FAQs for Disaster Victims - Casualty Loss for more information.
