How are fees and assessments figured in a homeowners association?
Homeowners association fees are considered personal living expenses and are not tax-deductible. If, however, an association has a special assessment to make one or more capital improvements, condo owners may be able to add the expense to their cost basis. Cost basis is a term for the money an owner spends for permanent improvements throughout their time in the home and is used to reduce eventual capital gains taxes when the property is sold. For example, if the association puts a new roof on a building, the expense could be considered part of a condo owner's cost basis only if they lived directly underneath it. Overall improvements to common areas, such as the installation of a swimming pool, need to be considered on a case-by-case basis but most can be included in the cost basis of any owner who can show their home directly benefits from the work.
Where do I get information on condos?
The major interest group for condominium projects and other so-called common-interest developments is the nonprofit Community Associations Institute,1630 Duke St., Alexandria, VA 22314; 703.548.8600. Also, check the Internet where CAI operates an informative site as does CIDNetworks.
Where do I get information on condo association laws?
- "The Condominium Bluebook" by Branden E. Bickel, B&B Publications, San Francisco, CA; 1994; 415.433.1233.
- Community Associations Institute, Alexandria, VA; 703.548.8600.
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