20 Aug Difference Between Co-Op and Condos
In today’s real estate market, two options are particularly appealing to first time buyers: housing cooperatives and condos. While most people aren’t sure if there is even a difference between the two; there is! It’s essential that you fully understand everything before you also consider buying a new home, which is why this page will be helpful to you.
What’s the difference between co-ops and condos?
While both options are private residences in a building with several units, that’s about the only similarity between the two. When you purchase a co-op, you’re not buying the individual suite. Instead, you buy a share in the building itself. Whereas buying a condo means that you are the owner of your unit, as well as commonly used spaces within the building.
With co-ops, you obtain a lease which allows you to live in your unit, but you have only purchased a share in the building. The owner of co-op never actually owns the apartment, while a condo owner does. You may be wondering why people buy a co-op when they never even own their home. The reason people choose cooperative housing is that it’s cheaper than condominiums are. Co-ops yield the buyer more control as a shareholder and usually have lower closing costs too!
But, in the long run, a condo has much lower fees. Co-ops have lower costs initially, but the monthly fees include payments for any building costs. These costs usually include underlying mortgage as well as property taxes. Amenities, utilities, and maintenance fees are all things that rack up your monthly payments, which can end up costing a fair bit.
In terms of tax advantages, owning either a co-op or condo will be about the same. If you take out a mortgage, then the annual interest is deductible. Though, co-op owners can deduct their share of the mortgage interest paid towards the buildings loan. Co-op owners may also deduct their share of any taxes paid on the property.
Rules and Regulations
With a co-op, there is an entirely different set of rules that you must follow. Every cooperative has a board made up of the building shareholders. Before selling or buying a co-op, the board must approve any potential buyers. The plus side is always being able to choose your neighbors while the downside is that it makes selling a little tighter. Typically condos are more laid back in terms of regulations, while a co-op is often much more strict.