Tax deductions are not as straight forward as single family houses or condos. Your best bet is to get guidance from the co-op management company on how to much maintenance you can deduct. Generally the portion that covers the building’s real estate taxes are deductible.
Flip tax is guided by bylaws, and can have variation on how these transfer fees are levied. See co-op management company for exact method of the transfer fee calculations.
Single family homes mortgages can be had with down payments as low as 5%. Co-ops have a much higher requirement for down payments, and can go as high as 25% of the purchase price. Co-ops function as one community, and existing members want to see that new members are financially sound enough in meeting monthly maintenance fees (that includes the building’s real estate taxes, mortgage payments, insurance, amenities, and staff salaries).
Co-op buyers usually have to accept higher interest rates than single family home and condo buyers. Lenders are only willing to take on the risk of lending to co-op buyers at higher interest rates because if a co-op borrower defaults on a mortgage, the lender is stuck with shares in the co-op instead of tangible real property. Selling shares in the co-op is harder than foreclosing on real property (a condo or single family home) to recover the mortgage.
The co-op corporation has a mortgage loan for the building. While the co-op buyers will take out a mortgage to buy shares of the co-op corporation from the seller. This is two-tiered financing because you took out (1) a mortgage to buy shares, and you pay maintenance fees that include paying (2) the building’s mortgage payments.
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