What Are Special Assessment Taxes? | Finance - Zacks
When you buy a home, you typically have to pay real estate taxes to state and local governments. Real estate taxes are based on a government estimate of the value of your home. This is known as its "assessed value." A special assessment tax is an amount you must pay above and beyond your normal property taxes to pay for special projects that benefit your neighborhood. The amount you pay for special assessment taxes may be based on the assessed value of your home.
Special assessment taxes can be imposed on you for a variety of projects that involve repairs or improvement to your property. Projects that might result in special assessment taxes include sewer and water system improvements, improvements to roads and sidewalks, installation of public utilities, cleaning, landscaping and the removal of old buildings. In some cases, property owners might be able to petition the government to pursue projects that result in special assessment taxes, such as the installation of speed bumps.
The government lets homeowners deduct the cost of state and local real estate taxes on federal income tax returns. According to the Internal Revenue Service, property taxes are deductible only if they are imposed uniformly on all properties in a jurisdiction and based on the assessed value of a property. Since special assessment taxes only benefit properties in specific areas, they are usually not tax deductible. Special assessment taxes are only deductible when they are paid to fund maintenance or repairs.
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