Nowadays, people prefer to live in community associations. While many factors are contributing to the increase of purchase of such associations - one thing is for sure, the number of associations continues to grow steadily and will likely continue to prosper in the future.

There are two types of community associations: Condos and Co-ops. Many people prefer the comfort of these two due to the decrease in responsibilities since regular maintenance of a proper home can become tiresome for a working individual. So, are you considering exploring the options of these community associations? With the help of an expert real estate attorney, you can find the perfect fit for you within your price range.

However, before that, you should decide whether you wish to live in a condo or a co-op. And, to make that decision, you need to understand the main difference between them.

What Exactly Is a Co-op?

Co-ops are pretty distinct. Compared to condominiums and other residential properties, co-ops stand out because they do not fall under the definition of real property. Simply put, when you purchase into a co-op, it is similar to buying shares in a corporation, which further entitles you to a single unit on the property.

Condo vs. Co-op

In its essence, both condos and co-ops are similar since the residents reside in separate units with shared “common” areas. This includes a pool, playground, or gym. However, the critical difference lies within the ownership structure of a condo and a co-op.

Differences Between Condo and Co-op

1. Common Areas

Purchasing a condo means you own the property, which includes the common areas.

Purchasing a co-op means you are entitled to a single unit and must share the common areas with the other owners.

2. Maintenance and Costs

Condos usually charge maintenance fees; lawn mowing, snow removal, and more.

Similarly, co-ops charge fees. However, you would be pitching in for the entire corporation, which means the costs would be higher.

3. Investment

While condos are relatively costly compared to co-ops, it is a better investment. This is because you can rent or sell it quickly.

Co-ops are cheaper to purchase as compared to condos. However, the cost of living increases drastically. Also, it is tough to rent out a co-op, so it is not a good investment.

4. Property Taxes

Condos are owned individually. If you buy one, you are the sole owner of it, so that you would get taxed separately like a single-family detached home.

Co-ops are described as a single property. So, there would only be a singular property tax assessment. Usually, this tax is evenly split among the shared co-owners. Most of the time, the amount is added to the maintenance fee. This results in lower property taxes on co-ops than on condos.

5. Tax deductions

If you have rightful ownership over a condo, then the mortgage interest and property or real estate taxes are deductible.

On the other hand, co-op residents are allowed to deduct their share of property taxes and mortgage interest reasonably.

Image Credits:
Image 2: Image by Condos CCSCA on Flickr