Landlords have the upper hand on tax write-offs for special assessments
Why homeowners can't claim HOA and COA fees as tax deductible
It’s the end of the year, and you’re scrambling to figure out what you can and can’t write off before the big April 15 tax deadline. You may be scheduling that annual physical exam, getting your second dental cleaning, or making sure to use that budgeted “free” money for contact lenses or glasses. Then, here comes an email from your property manager or condo board warning you that a special assessment will be voted on in the new year. As if you didn’t have enough bills and financial goals on your plate, now you have to add on yet another expense. While homeowners can’t declare monthly assessments (or special assessments) with their homeowners association (HOA) or condo association (COA), landlords have an advantage here.
ADVERTISEMENT ~ Amazon
As an Amazon affiliate, I earn a percentage from purchases with my referral links. I know some consumers are choosing to boycott Amazon for its DEI removal. However, after thinking about this thoroughly, I choose to continue promoting intriguing products from small businesses, women-owned businesses and (specifically) Black-owned businesses who still feature their items on Amazon. All five of my Substack publications now include a MINIMUM of one product sold by a Black-owned business. (I have visited the seller’s official site, not just the Amazon Black-owned logo, to verify this.) If you still choose to boycott, I 100% respect that decision.
Why aren’t special assessments considered tax deductible for homeowners?
The primary reason homeowners can’t write off monthly assessments (or special assessments) is because the funds paid are split up by 12 in your annual budget. It includes things like water, sewage cleaning, heat, electricity and waste management. If you’re not a self-managed COA or self-managed HOA, it could also include a property manager’s fees, their maintenance team and retainer fees for legal needs. Writing off these fees is like writing off your own electricity bill or cable bill. You would pay that regardless. While you can definitely use Form 1098 to try to get some funds back from your mortgage interest payments, everyday bills don’t usually count, according to the IRS.
Nondeductible payments (according to the IRS) include the following:
Insurance, including fire and comprehensive coverage, and title insurance
Wages you pay for domestic help
Depreciation
The cost of utilities, such as gas, electricity or water
Most settlement or closing costs
Forfeited deposits, down payments or earnest money
Internet or Wi-Fi system or service
Homeowners association fees, condominium association fees or common charges
Repairs to home
ADVERTISEMENT ~ Amazon
As an Amazon affiliate, I earn a percentage for each sale made with my referral links on this page.
As you can see, multiple costs above all fall under HOA and COA fees, and homeowners are paying for upkeep. There is one exception though, and this is solely for HOA landlords and COA landlords. Because they do not live in these properties and if this property is not considered their second home, they can write off special assessments.