Condo vs. Co-Op: Know the Differences

Condo vs. Co-Op: Know the Differences

Ready to move from renting or being a renter to owning your own home? But you might not want to deal with all the regular upkeep of owning a house. Some options can give you that ownership feeling without all of the work. Condominiums and Cooperative apartments offer maintenance-free living. If you’re looking for a different way to own, read on for more on how to choose between these two options.


Cooperatives (Co-ops )


Cooperatives are often misunderstood. They are not the same as condominiums and don’t involve owning property or going through a mortgage lender. When you buy into a co-op, you buy shares in a corporation and thus become a member. That entitles you to use the units on a property and other privileges that members of the co-op receive.


Here are some of the basics you should know to make an informed decision between the two.


  • Ownership: Condo vs. Co-op
  • Fees: Condo vs. Co-op
  • Property taxes: Condo vs. Co-op
  • Tax deductions: Condo vs.Co-op


Ownership: Condo vs. Co-op


Condos and co-ops are similar in that you’re buying into a building with its own rules, regulations, and community. But they have some key differences.


Buying a condo means you own the real estate, including an interest in common areas like lawns. You also have the right to use common amenities like pools or tennis courts. If you want to sell your condo, you must go through a third party, like a real estate agent or broker.


Cooperatives apartments work differently: when you buy into a co-op apartment, you buy shares that give you the right to live in the building and use shared spaces like laundry rooms and storage units, but not common areas like lawns or pools. If you want to sell your co-op shares, there’s no need for an outside party—you can do it directly with other shareholders within the building.


Fees: Condo vs. Co-op


Condos charge maintenance fees on a monthly basis. These fees cover the cost of maintaining the building and common areas, such as landscaping, trash removal, and snow removal. The prices are usually paid by the association that runs the condo complex.


In contrast, co-ops also charge maintenance fees set by the board of directors. Like condo fees, they can be higher than your monthly rent payment. This is because co-op owners have stronger control over their units’ upkeep than their condo counterparts. Maintenance fees vary depending on location and the building itself, so it’s smart to shop around.


Property taxes: Condo vs. Co-op


Since condominiums are individually owned, each owner pays their property taxes. For example, suppose a condo owner who lives in San Francisco purchases a $5 million unit on New York City’s Upper East Side. In that case, he will pay property taxes on that $5 million condos, while the co-op owner pays property taxes based on the value of their share of all units combined from their building.


Tax deductions: Condo vs.Co-op


Condo and Co-op residents both have the opportunity to deduct their mortgage interest and property taxes on their taxes. However, there are some differences between the two.


The mortgage interest and property/real estate taxes are deductible if you own a condo, just like home. If you own a co-op, however, your share of property taxes is deductible as well as your percentage of mortgage interest.

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