Colorado capital gains question

[Catherine]

Client sold property in Colorado, part of an association. He tells me that the HOA dues and assessments for the entire time he owned the place are additions to his basis, and that the CO realtor told him this is what is done in CO. 

Sounds suspicious, at best, to me. I can see assessments being added to basis (association roads, roofs, etc), but not standard HOA fees for mowing and plowing and general maintenance. Can't find anything in Colorado rules about this. Anyone here have advice? 

[Lion EA]

I agree with you. Assessments probably. HOA fees, no. I have a few clients in CO, but no one in a condo, so I haven't researched this issue. However, CO does follow the feds.

Don't you love realtors who give tax advice?!

[Catherine]

6 minutes ago, Lion EA said:

Don't you love realtors who give tax advice?!

Some of my favorite people, yeah - not. They were probably thinking about the CO capital gains exclusion for farmland bought before 2009 - but that's (a) only CO, and (b) only for those filing Schedule F with their 1040.

[mwrightea]

Sadly, we have a lot of realtors in Colorado that think they are tax experts when selling a property.  Colorado will assess penalty for not withholding and submitting taxes at time of sale if your client is a nonresident and transaction is taxable in Colorado.  I'm betting the realtor didn't tell your client that little nugget. The Colorado capital gain exclusion is not something that most realtors are familiar with.  Assessments for improvements are added to basis.  HOA  expenditures are not added to basis we follow must federal rules.     

[Catherine]

Thank you, @mwrightea - that's (mainly) what I told the client.  I've added in to the basis the assessments that were tagged with comments such as "Assessment - road improvements" plus a couple of selling fees.  Thank you.

No, they most certainly did *not* tell him about penalties for not withholding taxes - and of course, none were withheld. They're going to have a tidy little bill from Colorado.

[mwrightea]

Catherine, you are welcome.  The title company should have had your client file a CO DR 1083 if they are a non resident. 

I appreciate all the help I have received over the years from you and this board.