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.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

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.