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money Special Assessment District (SAD) Information

A REMINDER FROM THE INTERNAL REVENUE SERVICE

  • When a township or city charges you for local benefits near your home or other property, those charges are not deductible on your Federal Income Tax Return as a property (or real estate) tax.
  • Local benefits include charges, or a special assessment, to build sewers or sewer lines, streets, sidewalks, water mains and similar improvements. If you pay for a special assessment over a period of years, and interest is charged, you may be able to deduct the interest as a real estate tax in the year you pay it. (See your tax adviser.)
  • While not deductible, a special assessment will increase the basis in your property. (An increase to your basis will reduce the amount of the gain upon the sale of the property.)
 

Still have questions?

Questions?  Call the IRS toll free at 1-800-829-1040.