(Editor’s Note – J.S. originally wrote to us in January of 2013. You can read the original post at https://askmistercondo.com/reduced-common-fees-after-a-fire/)
J.S. from Pennsylvania writes:
Dear Mister Condo,
Thank you for your explanation on the condo fees from my previous post. Here is an update. It has been 15 months since the condo fire in Wyncote, PA and very little has been done in the building of the 55-unit condominium building. They have secured a builder and architect and if all goes well, the new 55-unit condo building could be completed late 2014 or early 2015. I am happy to report that I will not be moving back there. Once my condo is rebuilt I will sell it and now consider it as an investment property.
In spite of that, my monthly condo fees are still being paid faithfully on schedule. For many of the other residents who had insurance, their policies that covered their living expenses for 12 months after the fire ran out, leaving them with nowhere to go. Several of the former owners have filed for bankruptcy and those who haven’t or who are unable to pay their condo fees since the fire are going to lose their condos to the Condo board. It is a very sad situation.
There were several condo units owned by investors who used them as rental units. I am aware that after losing their condos to the fire the investors can claim the entire loss year after year (including the monthly condo fees) for income tax purposes. My question to you is this: Is there any tax relief that the rest of us can receive? I was able to claim the loss of my condo on last year’s taxes but since it isn’t my primary residence anymore can I claim the loss of use and condo fees each year until it is rebuilt and sold? What about my neighbors who are still paying condo fees? Is there any income tax relief credit available to us? No one seems to know. I appreciate any information that you can give.
Mister Condo replies:
J.S., what you are describing is truly a horrific situation and I would encourage all unit owners affected to seek whatever legal remedy they can. It strikes me as appalling that unit owners who have already lost their homes are now also losing their investment in the form of bankruptcy.
As for your specific tax question, I had to turn to an accounting friend as I am not a CPA or remotely qualified to answer such a technical tax-based question: “The facts and circumstances you are describing beg many more clarifying questions to create a list of possible outcomes than we could answer here at “Ask Mister Condo”. Our experts recommend to you that it is indeed time to seek the solid advice of a professional that can work through these possibilities with you and provide you with the best possible personalized solution.”
I couldn’t agree more, J.S.. I am sorry that you are not returning to your condo but, under the circumstances, who could blame you? You can find a directory of qualified CPAs online at the Pennsylvania Institute of Certified Public Accountants. They have a search form at http://www.picpa.org/ where you can enter your region and the type of specialist you are seeking. I entered “Tax – Real Estate” without specifying a county and came up with more than 400 names! Enter your county and narrow down those results for your needs. All the best to you, J.S..
Tax Implications of Converting Fire Damaged Condo to Investment Property: http://t.co/pAyU7wjFwZ
Tax Implications of Converting Fire Damaged Condo to Investment Property: http://t.co/q6FNJC5FdU