Does Co-op Maintenance Include Taxes?

One of the big questions that real estate buyers in New York City have is whether co-op maintenance is inclusive of real estate taxes. When you look at sites like StreetEasy and Zillow, you will notice that co-ops seem like they are missing taxes, which may leave you to wonder whether the property taxes have been included in the listing.

What is Included in Maintenance?

Maintenance is in fact inclusive of common charges and New York City real estate taxes. Co-ops, unlike condos, will bucket the common charges and taxes into maintenance because the difference in ownership structure. In a condo building, owners of individual units are responsible for paying their own tax bill. In a co-op building, owners don't technically own the units. Rather owners own shares of the co-op corporation, which entitle them to access their respective units. Therefore, in a co-op building, the co-op board is responsible for paying the quarterly property tax bill on behalf of all the co-op shareholders.

Read more on the differences between condos and co-ops.

In an effort to pay the tax bill in a timely manner, a co-op building charges a monthly maintenance, which is inclusive of property taxes. When looking at co-op units, it's important to understand which component of the maintenance is in fact related to the taxes versus which component is do to the common charges component.

Common charges pay for building upkeep, staffing, services the building employs as well as utilities for common areas. The taxable component of the maintenance is tax deductible. Of course with recently legislation passed by the Trump administration in 2018, only $10,000 of property taxes are actually tax deductible. 

Learn more more about how the 2018 Tax Reform Bill has impacted NYC real estate

Do Co-ops Pay Property Taxes?

The answer to this is a clear yes. Co-ops do pay real estate taxes. There is no such thing as a co-op that does not pay real estate taxes. Co-op maintenance is composed of the following:

  • Common Charges
  • Real Estate Taxes

The key is to understand what percentage of the maintenance is composed of each of these two factors.

NYC real estate taxes can be complicated, but with the help of a real estate broker, you can easily understand and learn how to maximize your tax benefits and identify a property that best matches your criteria.