Condominium vs. Co-operative: What’s the Difference?
Being a homeowner can be irksome and can take the fun out of
homeownership itself. If that’s the case,
it might be time to make a move to either a condominium (condo) or co-operative
(co-op).
Condos and co-ops offer the benefit of not having to handle
all of the routine upkeep you get in a house, but, as with everything in life,
there a pros and cons to both.
What is a co-op?
First, please understand that co-ops are unique as far as
ownership is concerned. Co-ops are different from condominiums and other
residential arrangements because they aren’t considered “real property.” They
are “interests in real property.” When you buy into a co-op you are buying
shares in a corporation which owns the land and building. You ownership in the co-op corporation
entitles you to an apartment or unit usually embodied in a proprietary lease.
But that’s not the only difference between a co-op and condo.
The basic differences:
Ownership
Condo: Buying a condo means you own the real estate,
including an interest in common areas.
Those common areas can be lawns, the swimming pool, or the parking
garage. There is no approval process
when you buy your condo, and you don’t get a chance to pick your neighbors.
Co-op: When you buy into a co-op apartment, you’re buying
shares that entitle you to a portion of the building. A co-op board will have
to approve you in as a new owner.
Proceedings, in the vast majority of cases are not subject review. When you sell your co-op, the buyer has to go
through the same procedures you did when you bought.
Fees and expenses
Condo: Condos charge maintenance fees, usually on a monthly
basis. This covers maintenance costs for the building’s common areas. They can include expenses ranging from lawn maintenance,
pool upkeep, snow removal and certain routine maintenance that all buildings
need. See below about real estate taxes
and mortgages.
Co-op: Co-ops will also charge fees, but they are often
higher in a co-op and sometimes include items like utilities. They will include
a proportionate share of the building’s mortgage and real estate taxes. See below.
Keep in mind maintenance fees for condos and co-ops may
increase over time.
Cost
Condo: Condos usually cost more to buy than a co-op, but you
have more flexibility with your investment. It’s usually easier to sell or
lease out a condo.
Co-op: While co-ops will have higher fees, the initial cost
of buying into a co-op is usually cheaper than a condo. However, it is almost
impossible to rent out your co-op apartment.
Property taxes
Condo: Condos are individually owned, so owners are taxed
separately just as they would be in a single-family home.
Co-op: Co-ops are considered a single property, with a
single property tax assessment that is split among the owners and usually
included in the maintenance fee. Property taxes are typically lower on co-ops
than on condos.
Tax deductions
Condo: If you own a condo, the mortgage interest and
property/real estate taxes are deductible – just like a home.
Co-op: Co-op residents can deduct their share of property
taxes and mortgage interest.
Disclaimer:
The information included is designed for informational
purposes only. It is not legal, tax, financial or any other sort of advice, nor
is it a substitute for such advice. The information may not apply to your
specific situation. We have tried to make sure the information is accurate, but
it could be outdated or even inaccurate in parts. It is the reader’s
responsibility to comply with any applicable local, state, or federal
regulations. Vested Land Services LLC and their employees make no warranties
about the information nor guarantee of results, and they assume no liability in
connection with the information provided.
For your real estate purchase or mortgage refinance or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow@vested.com
@vestedland
Posts
No comments:
Post a Comment