Mtnce Assessments

yeah - that's a lot of detail to get an accurate reply to your question......

If the maintenance isn't sufficient, then the co-op or condo has to either

(1) raise the maintenance, or
(2) assess the owners, or
(3) deplete cash reserve, or
(4) borrow.

It all comes from the owners. Tell the board you prefer #1.

#2 may actually have better tax consequences upon resale because generally special assessments are considered capital improvements. There is no real way to determine where funds raised by special assessments go, nor is there a way to establish with any real certainty where maintenance monies were spent and whether they were spent on capital improvements. So the IRS sort of splits the baby and just deems special assessments capital improvements and maintenance as non-deductible no matter how it was used.

This is how it was explained to me. As a result, I'd rather be paying special assessments because one day I'll get some of that back. Also, it just looks better to have low maintenance upon reselling even if there is a special assessment in place. Even if you aren't selling now, it will make it easier for others in building to sell for better price and thus enhance your apt's worth.

Right, determining basis is sloppy. Any decade now I'm going to go through the statements and figure out what to add to my basis. My co-op has never assessed, except for a fuel surcharge that was labelled as such, so capital improvements have been funded through the conversion reserve fund and money accumulated from flip taxes and annual surplus.

Right, too, that buyers focus on monthly maintenance rather than figuring out what the *real* cost is.

A serious problem arises with trying to parse a capital deduction from maintenance. If reserve funds are being spent, the building presumably had reserves when you bought. That reserve was then comingled with maint payments you made. In addition, the building may have refinanced or opened a revolving line of credit and used funds from these things to deal with capital projects. You may be able to determine the total spent on capital improvements during your tenancy and figure your "share" based on the number of shares you hold in the coop, but that isn't really a legitimate way to come up with a number the IRS will accept. Your "share" will not reflect monies you yourself actually paid, but rather will include old reserve fund $$, LOC money, and refinance money. With no special assessments, you basically have no building-wide capital improvements to add to your cost basis.

Aw shucks, my share of that elevator, roof, etc. gone to waste as far as increasing basis goes. I think I'll leave it for the heirs to figure out, or not, when I leave here in a body-bag.