New York City Real Estate: Condos vs. Co-ops

Article Written By: Gea Elika17

Condo buyers will own their unit and share of common grounds (lobby, fitness area, laundry) as long as they remain the owner. Co-op owners receive shares in the entire building and, therefore, own the building's common features. Co-op owners may be eligible for a number of tax deductions.

Yet once the owner moves, the ownership transfers back to the corporation that runs the cooperative. Owners cannot transfer titles or ownership. Condo owners, however, can sublet their condos or even sell the units. A condominium apartment is 'real' property.

When buyers purchase a condo, they receive a deed and must pay yearly taxes and ownership fees. Condos carry less common and maintenance charges than co-ops. Similar to the maintenance charge at co-ops, however, there is a monthly common charge. Yet the charge is lower than the monthly co-op charge because there is no underlying mortgage for a condominium building. These charges are not tax-deductible and do not include real estate taxes.

With co-ops, the corporation pays the expenses at first - real estate taxes, building's mortgage, salaries, maintenance and#150; but then the cost is split among the owners of the residences. Individual owners pay amounts in relation to their 'share' in the building.

Most condo buyers can finance up to 90% of the condo's selling price. Condominiums are a flexible choice and young buyers, investors, and buyers using creative financing are urged to consider condos.

Buying a co-op requires a substantial down payment and#150; up to fifty per cent. Although financing may be an option for some home buyers, they can expect a down payment in excess of the standard ten per cent. In fact, some co-ops do not accept down payments and demand a full, upfront payment.

The application process is much easier for purchasing a condo than a co-op. As well, it is much easier to get accepted to buy a condo than to become part of a co-op. Buying a condo is an extremely straightforward process.

In a co-op, the building's Board of Directors decides whether or not to accept applicants as owners. A potential buyer fills out an application and is interviewed by a representative of the building. Co-op rules and ownership details vary according to building. Home buyers should inquire about the corporation tax structure as sometimes owners are eligible for tax deductions.

As more and more new buildings are constructed in New York, the popularity of condominiums is on the upswing. Usually, condos have a higher overall cost than co-ops because there are more co-ops than condos. Eighty per cent (85% and even 100% in some NYC areas) of ownership opportunities come from co-operatives.

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