American Homeowners Association Membership  
American Homeowners Association



Buy your piece of a hi-rise.
Find out exactly what ownership means in Condo or Co-op?

Decisions, decisions...a condo or co-op apartment may be attractive to the first-time home buyer seeking to make the transition from renting to owning. But what makes a condo different from a co-op? Make sure you know what you're getting into before you buy.

In a cooperative, residents don't actually own their apartments. The co-op member instead holds a lease or contract enabling him or her to occupy the unit. Each also has an interest in the entire building. In a condominium, the condo owner owns the entire apartment along with a percentage of the common areas.

The key difference between buying a condo or co-op is that most cooperatives require the purchaser to be approved by a membership committee. Don't worry, it's probably not the Spanish Inquisition. The only two reasons you can be turned down are: a) if you lack the financial wherewithal to live there, or b) if you refuse or show an unwillingness to abide by the cooperative association's rules and regulations. No applicant can be rejected because of age, sex, race, sexual preference or religion.

Cooperative associations manage the property collectively as do condominium associations. But condo associations do not typically approve new purchasers who want to buy into the building. The co-op association is typically a corporation that owns both the building and individual units, made up of all the unit owners. Each unit owner has shares in the association. Decisions are made by vote of the co-op association members or the association's board of directors, depending on the by-laws, on matters including financial management, rules of occupancy, building maintenance, and so on.

Apart from that, there are a few differences from a tax perspective. Cooperative residents get to deduct their proportionate share of the interest on the loan for the entire cooperative. Plus they can deduct interest they pay on their own loan. And they can deduct their proportionate share of real estate taxes, under most scenarios.