Co-ops and Condominiums
Help!
|
|
||||
|---|---|---|---|---|---|
| Cooperatives and Condominiums BECAUSE, they actually synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership | synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership
🗑
|
||||
| The Golden Ticket (at least taxwise) Tax Benefits of Home Ownership in the US | 1.Mortgage interest & property taxes are deductible2.Avoidance of tax on sale of primary residence-2 year use as primary residence within last 5 prior to sale gets $250,000 capital gain exclusion for 1 person3.Small,temporary 10% tax credit-newer owners
🗑
|
||||
| The Problem You live in New York (or some other big city), where most residents lease an apartment | 1.Those residents are tenants-their rent covers the landlord’s mortgage insurance and property taxes,landlord gets deductions, & tenants get 0 writeoffs.
2.rent payments do not build any equity and they have nothing significant to sell when they move
🗑
|
||||
| 2 solutions for these people | 1.cooperative 2. condominium
🗑
|
||||
| Solution 1–A Cooperative-6 points-Here's 1-4 | 1.Corporation is formed to build or buy an apartment building, with intent to make it a co-op 2.The corporation issues shares to tenants in exchange for $s 3. gets “Blanket
Mortgage” 4.each shareholder gets to lease an apartment in the co-op
🗑
|
||||
| Co-op Points 5-6 | 5.Sec 216 of Internal Revenue Code allows co-op tenants to deduct a portion of the rent they pay 6.the Shares and Proprietary Lease of a residential cooperative are “deemed” the same as fee ownership of home
🗑
|
||||
| blanket mortgage | using the tenant’s $’s as equity, the corporation finances the rest of the construction/purchase price with a mortgage
🗑
|
||||
| deductible -the portion of the rent they pay that is deductible | amount that is devoted to the corporation’s mortgage interest and property taxes
🗑
|
||||
| proprietary lease - Each shareholder is allowed to lease an apartment in the co-op | 1.homeowner’s bundle of rights consists of shares in a corporation and rights as tenant 2.The corporation pays interest on its mortgage and pays the property taxes on the building
🗑
|
||||
| co-ops are not real estate | 1.no conveyances 2. transfer and financing of co-op apartment - for portions of the purchase price that represent payment for the seller's equity-are governed by the UCC, not real estate law
🗑
|
||||
| co-op purchasers are buying in to a "going business" | be sure you calculate the seller's share of corporate liabilities and deduct it from the apartment's value before agreeing on a price
🗑
|
||||
| What happens to a Blanket Mortgage if a significant number of the co-op’s shareholder/tenants fail to pay their rent? | do you know?
🗑
|
||||
| condominiums - same problem as co-ops, but a true "real estate" solution | 1.condominiums create real estate that can be owned in fee simple, transferred by deed and mortgaged, just like a single family detached residence
2.unlike co-ops, condominiums can be used for non-residential purposes like parking places, in big cities
🗑
|
||||
| How are Condominiums created? Pictures and Words recorded with the Register of Deeds | condominium plat - pictures are site plans for the condominium project and individual floor plans of occupiable buildings(or dimensional drawings for parking places, etc.)
🗑
|
||||
| words recorded with the register of deeds | Words are contained in a document called the Condominium Declaration
🗑
|
||||
| Condominium Declaration is a master deed restriction/CCR/easement document It defines: | 1.UNITS that are owned individually by the buyers 2.COMMON ELEMENTS that the Unit owners hold as Tenants in Common 3.LIMITED COMMON ELEMENTS that are common elements dedicated to individual use by Unit owners
🗑
|
||||
| Condominium Declaration also defines | 4.an assoc of Unit owners that acts like a little govt to manage Common Elements, make rules governing use of Units & Common Elements, insure property & collect condominium fees 5.maintenance obligations of Unit owners & Assoc
🗑
|
||||
| Unlike a Cooperative apartment, a condominium Unit and related interest in the Common Elements are truly real estate | 1.can be deeded, mortgaged etc.2.Associations do not often borrow large amounts, so the issue of Blanket Mortgage is not as great a concern as for co-ops
🗑
|
||||
| condos-What happens if a significant number of condo Unit owners are foreclosed, and liens for Association fees are left unpaid? | do you know what happens?
🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Created by:
rainesv