The co-op’s financial statements can tell you about how well our co-op is doing financially. Our latest three financial statements are available here in PDF format (to view them, you must have Adobe Acrobat Reader installed on your computer):
| 2001 (128KB) |
2002 (604KB) |
2003 (411KB) |
Shareholders in a co-op corporation are considered by the Internal Revenue Service to be homeowners. As a shareholder, you are entitled to deduct your share of the real estate taxes and mortgage interest paid by the cooperative on tax years when at least 80 percent of the co-op's gross income originates from shareholders. If you obtained an individual mortgage to purchase your shares in the corporation (also known as a “share loan”), you are also entitled to deduct any interest paid on that loan.
At the beginning of every year you will receive a letter from the co-op’s accountants that indicates how many dollars per share for (1) real estate tax and (2) mortgage interest you will be allowed to claim as itemized deductions on Schedule A of IRS Form 1040. You will also receive a Mortgage Interest Statement (IRS Form 1098) from our management company that indicates the exact dollar amount that you can deduct for mortgage interest (but not for real estate tax).
If you were granted any real estate tax abatements during the year, which were reflected as maintenance credits or received by check, your real estate tax deduction must be reduced by the total amount of the abatements you received.
The interest paid on the individual mortgage (share loan) is reported on a Form 1098 sent to you by your financial institution.
Following is an illustration of how to claim the allowable itemized deductions. This illustration is for a two-bedroom apartment that has 130 shares allocated to it; the amounts per share were those allowed for the year 2000.
|
Deduction type |
Amount per share |
Number of shares |
Dollar amount |
|
Real estate tax |
$8.7305 |
130 |
$1,134.97 |
|
Real estate tax abatements |
|
|
– $388.98 |
|
Co-op mortgage interest |
$13.1348 |
130 |
$1,707.52 |
|
Share loan interest |
|
|
$6,143.74 |
|
Total allowable deduction |
|
|
$8,597.25 |
For more information on these deductions, go to MSN Money Central’s Q&A about Mortgage Interest and Real Estate Taxes or to the IRS Web site.
If you sell your shares in the co-op, you may be able to exclude some or all of the profit realized on the sale. If you can exclude all of the gain, you do not need to report the sale on your tax return; that is, you will not have to pay any taxes on the profit. If some (or all) of the gain cannot be excluded, it is taxable as a capital gain, and you must report it on Schedule D of Form 1040.
To claim the exclusion, you must meet the ownership and use tests. This means that during the five-year period ending on the date of the sale, you must have:
If you owned and lived in the property as your main home for less than two years, you can still claim an exclusion in some cases. The maximum amount you will be allowed to exclude will be reduced.
(If you have a capital loss, rather than a gain, unfortunately, you will not be able to claim the loss as a deduction.)
For more information on the home sale exclusion, read IRS Publication 523, "Selling Your Home."