Special Assessment
Definition and meaning of Special Assessment in real estate.
A special assessment is a specific charge levied on property owners by a local government or a homeowners association to fund public or community improvements. This tax or fee is charged in addition to regular property taxes or association dues to pay for projects that benefit the specific properties in the area.
In more detail
These assessments commonly arise for infrastructure projects such as paving roads, installing streetlights, or repairing sewer systems. Homeowners associations also issue special assessments for unexpected community expenses, such as repairing a building roof or repaving a shared parking lot. Unlike general taxes, a special assessment is only levied on properties that directly benefit from the improvement.
If an owner fails to pay, the taxing authority or association can place a lien on the property, which can lead to foreclosure.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Who pays | The property owner |
| Applies to | Properties directly benefiting from the improvement |
| Watch out for | Unpaid assessments that can result in a property lien |
A local city council votes to install new sidewalks along a residential street and charges each homeowner on that block a special assessment to cover the construction costs.
Frequently asked questions
Can I appeal a special assessment?
Yes, property owners typically have a window to protest a municipal or homeowners association special assessment at public hearings before it is finalized.
Are special assessments tax-deductible?
Generally, municipal special assessments for local improvements are not tax-deductible because they increase the property value, though you may be able to add the cost to your tax basis.