assessments due to Hurricane

[Bucky]

Client own condo (rental) on coast in Alabama. They are still repairing for Ivan. My question concerns assessments. The are and have been hit with assessments over the last year and big ones for this year. How do you handle assessments for repair of pool, sidewalks, landscaping ect. I don't think it is fair to capitalize the whole amount. These are expenses that are needed in order to rent condo units.

Thanks

Bucky

[jainen]

repairs

Buying the condo is also an expense needed to rent it, but you still have to capitalize it. The question is, are these repairs or capital improvements? You called them repairs.

[Bucky]

repairs or improvements?

Both. The pools are completly destroyed. Other items are repairs. The assessments are for items not paid by insurance . They are sueing the insurance company at this time and might recoup some of the money being assessed. I was basically wondering how others handled this. It is really hard to prorate between repairs and improvements.

[jainen]

prepare their taxes

>>It is really hard to prorate<<

That's why your clients hired a professional to prepare their taxes.

[JON]

Casualty-maybe

value of the condo unti before IVAN versus the value after - you may have a loss with that. IVAN is is on I believe that is exempt from the 10%... Damages to common area property that efect the value of a unit I think qualify as casulty....

[Zee]

There is a common clause in most home or condo property insurance policies. That clause, known as a loss assessment clause, typically allows people to recover up to $1,000 paid for repairs to common property.

But, before you relay this information to clients as "good news", read this article:

http://www.sun-sentinel.com/business/sfl-zloss14mar15,0,6313379.story?coll=sfla-business-utility