If you're a co-op resident, you know that you have many of the same benefits as homeowners: long term housing security, control over your own unit, stable housing costs, etc. You should also know that, like a homeowner, you have potential tax benefits and liabilities.
Like homeowners, many co-op residents are eligible to declare some of their carrying costs as a deduction on Schedule A of federal form 1040. This is potentially a major deduction, but it can only help you if you file a tax return, if you itemize your deductions, and if your co-op is the right kind of co-op. Syndicated co-ops, for example, and co-ops with substantial commercial income cannot pass this deduction along to members.
On the other side of the ledger, you could also have a capital gains liability when you leave your co-op.
Capital gains taxes are taxes on an asset's appreciation. A homeowner, for example, who sells his/her house for more than it was bought for might pay capital gains taxes on his/her profit. Likewise, a co-op member who sells his/her shares for more than they paid for them might have to pay capital gains taxes. In either case, of course, the owner should consult with a qualified professional.
One way to keep your capital gains liability down is to keep track of the improvements you make to your unit, especially if these improvements increase the value of your share. The share of your "profit" that is due to your improvements would then not be considered a profit by the IRS, and thus not be taxed. For more information on what the IRS considers an improvement, you can order publication 530 from the Internal Revenue Service (1-800-TAX-FORM) and look under "Adjusted Basis."
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