Deduct HOA fees and assessments from capital gains?

[O2Bfree]

I have a question for the real estate tycoons out there. We just sold our little vacation place, which was in a homeowners' association. We cannot deduct the HOA dues from capital gains, is that right?

We also paid $1400 in special assessments for some dredging and repairs to a bridge. We can deduct that, right?

 

[Dash man]

Can't deduct HOA fees, and I'm pretty sure the bridge repair and dredging are maintenance and not capital improvements, especially since it's to a common area and not your specific property.


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[Souschef]

Having been on the board of my condo for 25 years, I agree that neither the HOA fees nor the special assessment can be deducted.

 

[O2Bfree]

Aww shucks. Oh well. Info on the web was confusing, so thanks much Dash man and Souschef for clearing that up.

 

[Sunset]

If you rented them out and claimed the income as rent, then yes you can deduct it along with other expenses like insurance, heat, elec, repairs, etc.

But if it was just personal use, no.

 

[pb4uski]

Think of it like a house... maintenance is not deductible and can't be added to basis so the same for HOA fees.

The special assessment will depend on the nature of the costs. If those cost were capitalizable, then add to basis (reduces gain) but if not then maintenance and not deductible or additive to basis. If the association capitalized the cost of the work as an improvement or major repair (like a new roof) then I would add it to basis, if not then no tax benefit.

Deducting Real Estate Taxes On Your Home | Nolo.com

If you own a condominium and your homeowner's association imposes special assessments to pay for capital improvements to the common areas such as a new roof or new swimming pool, you get no deduction but you may add the amount to your condo's tax basis.

 

[ZMAN]

Did these expenses come out of closing proceeds on your closing statement? If so I would deduct them to determine your gain? Also, and I forget, do you get the capital gains protection on a second home that you do on a primary residence.

 

[pb4uski]

No, only primary residence gain is tax-free (with limits) ... gain on the sale of a second home would be capital gain rates if held for over a year.

 

[O2Bfree]

Did these expenses come out of closing proceeds on your closing statement? If so I would deduct them to determine your gain? Also, and I forget, do you get the capital gains protection on a second home that you do on a primary residence.

We paid the assessment earlier this year. Actually, it's been prorated, so we're getting a little back.

Maybe we should have gamed the primary residence rule. We're not married, and could have bought the place under one name, then made it look like the owner was living there. Wouldn't have been too difficult, as the place is not far away.

 

[Texas Proud]

Did these expenses come out of closing proceeds on your closing statement? If so I would deduct them to determine your gain? Also, and I forget, do you get the capital gains protection on a second home that you do on a primary residence.

Just because they are on a closing stmt does not make them deductible...

They either are or are not deductible, and these are not...