Co-operative ownership provides the same tax benefits as all other
forms of home ownership. The tax deductions available to the co-operative
corporation, as result of the payment of real estate taxes and interest
on the corporation’s mortgage, are passed through to the individual
unit owners in proportion to their ownership interests provided
that the co-op qualifies under Section 216 of the IRS Code. Briefly
stated, if in a particular year more than 20% of the co-op’s
gross income is derived from non-unit owning persons, i.e., businesses,
it cannot pass through interest and real estate tax deductions to
its unit owners.
A co-op owner can pledge his or her ownership interest in a unit
as collateral security for a loan, commonly referred to as a Share
Loan. The interest on a share loan is also tax deductible.
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