Some of my first time home buyers want to know the difference between a Co-op and a Condo. Here is the difference between the 2. If you know the difference you can decide which would be better suited for them.
A Co-op:
When you buy a co-op, you don't actually own your apartment. Instead, you own shares of a co-op corporation that owns the building. Its like owning a Mutual fund. There are many shareholders and you own a piece of a company. The larger your apartment, the more shares within the corporation you own. Monthly maintenance fees cover building expenses including heat, hot water, insurance, concierge, and real estate taxes. Co-ops are generally less expensive then condos . Some of your monthly maintenance fees are tax deductible.
All prospective purchasers must be approved by the Board of Directors. The Board approval process is often time-consuming and rigorous -- requiring extensive information regarding finances, employment, and personal background. Monthly maintenance fees for co-ops are usually much higher than for condos. This is because the monthly fee includes part of the underlying mortgage for the building.
Many co-op boards limit the amount of the purchase price that can be financed and require higher down payments than are usually required for condominiums.
What is a Condominium:
Condo's are "real" properties. Buying a condo is much like buying a house. Each individual unit has its own deed and its own tax bill. Condos offer greater flexibility, but are often priced higher than comparable co-op apartments. Advantages of Buying a Condo
In most cases, buyers can finance a larger portion of the purchase price and put less money down.
When purchasing a Condo you don't have to deal with a board approval.
Maintenance fees are not tax-deductible.
