J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

16.5 Assessments

Assessments by homeowner’s association not deductible as taxes.

Assessments paid to a local homeowner’s association for the purpose of maintaining the common areas of the residential project and for promoting the recreation, health, and safety of the residents are not deductible as real property taxes.

Assessments for government services.

If property is used solely as your residence, you may not deduct charges for municipal water bills (even if described as a “tax”), sewer assessments, assessments for sanitation service, or title registration fees. A permit fee to build or improve a personal residence is added to the cost basis of the house.

Assessments for local benefits are deductible if they cover maintenance or repairs of streets, sidewalks, or water or sewer systems, or interest costs on such maintenance. However, assessments for construction of streets, sidewalks, or other local improvements that tend to increase the value of your property are not deductible as real estate taxes. You add such assessments to your cost basis for the property.

If you are billed a single amount, you may deduct the portion allocable to assessments for maintenance or repairs. The burden is on you to support the allocation.