A Tax Break on Condo Assessments
You might not have to worry about capital gains tax when you sell a condo that's undergone capital improvements.
I live in a condo that is 20 years old, and we are now faced with major projects, including replacing the roof. If the condo board charges owners a special assessment for these costs, can we apply that amount to help lower the tax bill when we sell our condos? -- H.G., via e-mail
If the assessment is specifically for capital improvements, rather than regular maintenance, the amount can be added to your cost basis when you sell your condo, which could reduce your taxable gain. “It is important to have documentation of the nature of the assessment and what the funds were used for,” says Susan Howe, a certified public accountant in Philadelphia.
But you may not have to worry about capital gains tax anyway. Most people no longer have to pay taxes on their profits when they sell their principal residence, whether it’s a house, condo, co-op or duplex, says Greg Rosica, a tax partner at Ernst & Young and a contributing author to the EY Tax Guide 2015. If you lived in the home for two of the five years before the sale, up to $250,000 in home-sale profits is tax-free, or $500,000 if you’re married and file jointly.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
-
Is a Phased Retirement Right for You?
Want to keep working, just not as hard? A phased retirement may just be the answer.
By Kimberly Lankford Published
-
Four Tips to Make Your Sales Presentation a Winner
Being prepared and not being boring can go a long way toward persuading a potential customer to buy into what you’re offering.
By H. Dennis Beaver, Esq. Published
-
A Bunch of IRS Tax Deductions and Credits You Need to Know
Tax Breaks Lowering your taxable income is the key to paying less to the IRS. Several federal tax credits and deductions can help.
By Kelley R. Taylor Last updated
-
Don’t Miss This $2,500 Tax Break for Paying Your Student Loan
Tax Deductions Do you qualify for the student loan interest deduction this year?
By Katelyn Washington Last updated
-
Six Tax Breaks That Get Better With Age
Tax Breaks Depending on your age, several tax credits, deductions, and amounts change — sometimes for the better.
By Kelley R. Taylor Last updated
-
Biden Proposes New Homebuyer Tax Credits
Tax Credits President Biden is calling for new middle-class tax breaks including a mortgage tax credit.
By Kelley R. Taylor Last updated
-
Will Florida Property Tax Be Eliminated?
Property Taxes A new proposal is raising questions about revenue generation in the Sunshine State.
By Kelley R. Taylor Published
-
States That Won't Tax Your EV
State Tax Most states impose additional fees on electric vehicles, but these states don’t penalize EV owners, and some also offer other tax incentives.
By Kelley R. Taylor Last updated
-
Tax Season is Here: Big IRS Tax Changes to Know Before You File
Tax Filing Tax deductions, tax credit amounts, and some tax laws have changed for the 2024 tax filing season.
By Kelley R. Taylor Last updated
-
Your Arizona Family Rebate is Taxable: What to Know
State Tax Thousands of Arizona families will need to report income from special child tax relief payments.
By Kelley R. Taylor Last updated