What is Special Assessments under Homeowner Expenses? What can I deduct?

[Subnetsurfer]

My condo didn't have money to cover each unit's hot water tank, building's roof work, and Elevator maintenance fee, we as owners all shared the cost based on percentage. Can I put the expenses on Special Assessments? Thank you.

[Opus 17 · Accepted solution]

You have to separate maintenance from improvements.  Improvements extend the useful working life of the property or add value; maintenance keeps the property in as-was condition.  Roof and hot water heater are improvements.  

If this is rental property and you are reporting the rental income on schedule E, you would include the cost of special assessments for building improvements as costs for improvements that must be depreciated over 27.5 years. Maintenance costs may be deducted in the year paid. 

If this is your personal residence, these costs are not deductible.  Improvements add to your cost basis and may reduce your taxable capital gains when you sell.  Maintenance is just stuff you pay for as a homeowner and is never deductible.

[JohnW222]

Unfortunately, you can't take a deduction for these expenses if they're assessed on your personal property.

Charges for improvements that tend to increase the value of your property can't be deducted on your return.  Please see the IRS's "2019 Instructions for Schedule A" for more information.

However, you should keep your records of any such assessments for as long as you own your condo.  These expenses will affect the cost basis if you sell it in the future.