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.