Assessments made against real estate for the purpose of funding local improvements are not deductible in the year paid but rather should be added to the cost basis of the property.

Question

Quizplus · Accepted Answer

Assessments made against real estate for local improvements, such as sidewalks, streetlights, or sewer improvements, are not considered deductible expenses for income tax purposes. Instead, these assessments should be added to the cost basis of the property and may ultimately reduce the taxable gain when the property is sold.

Assessments Made Against Real Estate for the Purpose of Funding