Do HOA Back Dues paid in Foreclosure Adjust Cost Basis?

[J Sheth]

A property purchased at Courthouse foreclosure often come with liens. Delinquent HOA assessment not paid by the foreclosed owner is a common problem that becomes the burden of the new Buyer, who has to settle with the HOA.

Do the (sometimes) excessive HOA back dues increase the Cost Basis of the property that can be written off against ordinary gains or does it expense out (as passive income) on IRS Schedule E? My Accountant is unsure.

Any suggestions in dealing with HOAs that are not willing to discount the back dues owed, even from their failure to prosecute the delinquent prior owner only because their CC&R allows them to claim everything and the kitchen sink?

An advise with annotated references or useful links much appreciated.