Paying for paving

[taxmandan]

A group of neighbors (not an HOA) want to repave the public roadway that goes to their homes because the county can't afford to and won't. They ask if there are any tax deductions or basis adjustments that they can make to their properties for all of the expense to what should be a public safety problem. Anyone have quick knowledge on such a thing, I'm still researching online but not sure if I can find much. TIA

[Uncle Sam]

I wouldn't readily accept the County's argument that it "won't" - the neighbors pay real estate taxes that should include maintenance of roadways to keep them safe. Don't they snow plow the roadway during the snow season? Aren't there heavy duty commercial vehicles, emergency vehicles or school buses that use those roads continuously, or at least rely on them to be safe. The fact that it "can't afford" is another issue that would require a financing mechanism by the County to provide the funding such as a bond issue. If you can convince the County people to realize that they are endangering not only the residents' lives, but others that need to use the roadway in performance of their duties - whether government or private related - then the County should in good conscience for everyone's safety - repave the roadway.
As far as a quick fix tax remedy - no - the roadway doesn't belong to them. What they should do as well - is to check their insurance policies for adequate coverage of such an emergency as well as provide a group petition to the County notifying them of the dangers of not fixing it and that each of them would hold the County liable in the event such an tragic event takes place and there's harm to individuals and property for not taking care of it after being notified. Might involve a cost of a safety engineer or attorney.

[TaxGuyBill]

Although they could donate money to the county that would qualify as a charitable contribution, if they say "you must use it for this purpose" would invalidate the tax deduction.

I agree with Uncle Sam - they can petition the county for the repair. They may even want to tell the county "we will contribute half of the cost to the county". That way it would be a win-win situation. They neighbors get what they want at half of what they are willing to pay, and the country gets a brand-new road at half of the price.

[TAXNJ]

Sounds more of possible communication than a tax issue.

When they say “....because the county can't afford to and won't...”, who in the county are they getting such a reply?

The “group” should consider a petition (contact) to the head county engineer and elected county officials about their issue(s) and as to the county’s “paving schedule” regarding the date the road is scheduled for paving.

To avoid hearsay, get in writing their response then contact the local media (print & tv) of the situation.

[Rapid Robert]

Look up "benefit assessment district" a.k.a. special assessment district. https://en.wikipedia.org/wiki/Special_assessment_tax

While not an ad valorem tax (and therefore not deductible as a real property tax), assessments paid via such an arrangement might lead to some tax basis adjustments. However, with Sec 121 exclusion or eventual inheritance of the property, that might not really make any difference.

I suspect they will not be able to just hire a licensed contractor to start working on the road without some kind of permit being issued, which doesn't seem likely. Seeing as how roads don't even need to be paved to be safe, it's hard to see how it is a "public safety issue", since surely there is a speed limit which would permit safe travel on the road.

[Uncle Sam]

"it's hard to see how it is a "public safety issue", since surely there is a speed limit which would permit safe travel on the road."

Tell that to the fire department or ambulance that has to get special emergency equipment down that street to rescue someone or save lives and property - regardless of what speed they go.

[Rapid Robert]

Tell that to the fire department or ambulance that has to get special emergency equipment down that street to rescue someone or save lives and property - regardless of what speed they go.

OK.

Meanwhile, back to actual tax discussion - do you see anything wrong with using the well-known approach of creating a benefit assessment district for these neighbors to legally get some kind of (probably small) tax benefit for paying to upgrade their road?

[Uncle Sam]

Yes I do see something wrong with it - a public roadway should be serviced by the entity that taxes the public for its maintenance. If it was a private road - then yes - an assessment district would be proper.
But when a group of residents feel that concerned over the public safety due to poorly maintained public property - the government entity that manages it should be concerned. There shouldn't be an additional cost to the group of residents alone.

[taxmandan]

Well, you have lots of opinions on what should be done by the county but it's not going to happen. Our public officials don't give a s#*t about the condition of the road, it has a 55 mph speed limit which would likely bend or break many drive trains if vehicles tried to go that fast. Don't care about what action the folks might take, just wanted to know if there is anything under the tax laws that might help them mitigate the cost, but apparently not. Thanks anyway.

[Rapid Robert]

, just wanted to know if there is anything under the tax laws that might help them mitigate the cost, but apparently not..

Yes, there is. See Pub 530.

"Assessments for local benefits. You can’t
deduct amounts you pay for local benefits that
tend to increase the value of your property. Local
benefits include the construction of streets,
sidewalks, or water and sewer systems. You
must add these amounts to the basis of your
property.
You can, however, deduct assessments (or
taxes) for local benefits if they are for maintenance,
repair, or interest charges related to
those benefits. An example is a charge to repair
an existing sidewalk and any interest included
in that charge."

[taxmandan]

Yes, there is. See Pub 530.

"Assessments for local benefits. You can’t
deduct amounts you pay for local benefits that
tend to increase the value of your property. Local
benefits include the construction of streets,
sidewalks, or water and sewer systems. You
must add these amounts to the basis of your
property.
You can, however, deduct assessments (or
taxes) for local benefits if they are for maintenance,
repair, or interest charges related to
those benefits. An example is a charge to repair
an existing sidewalk and any interest included
in that charge."

That section is referring to a government assessments. The reference to HOA fees is probably closer to the situation:

Homeowners’ association assessments. You can't deduct these assessments because the homeowners’ association, rather than a state or local government, imposes them."

Non-Government assessments are not deductible or added to basis.

[JON]

You can request from the city, county or taxing authority to assign values as to deductible or not. Most cities to respond. They respond better with MORE requesting it!!!!!!!!!!!

[Dusty2004]

Could the pave it and take a charitable deduction since they donated it to the county?

[spanel]

Could the pave it and take a charitable deduction since they donated it to the county?

Although they could donate money to the county that would qualify as a charitable contribution, if they say "you must use it for this purpose" would invalidate the tax deduction.

[Dusty2004]

Although they could donate money to the county that would qualify as a charitable contribution, if they say "you must use it for this purpose" would invalidate the tax deduction.

Why could they not contribute goods - the paving - instead of cash? I can contribute goods (assuming that they are appraised if needed) and get a charitable deduction? You know what the value of the paving is because you just paid for it.