Tax Time and Co-Op Living— What Co-Op Costs Are Tax Deductible?
Jan 27, 2022 Brooklyn Buyers,Brooklyn Buyers Agent,brooklyn cooperative,brooklyn real estate,brooklyn realty,coop board,coop tax deductions,cooperative living,nyc taxes
If you currently live in one of Brooklyn’s historical & whimsical co-ops, you have a few things to keep in mind this tax season. We’ve put together a quick guide of tax deductions —and non-deductible costs— to help you out when you start to file. Check it out in the post below, and feel free to let us know if you need help in any way!
Tax Deductible Co-Op Costs
The following fees are tax-deductible, as long as you choose to itemize your year-end bill instead of taking the standard deduction.
A Portion of Maintenance Fees:
You’re in luck! Many co-op residents find themselves with decent savings when they enter in their maintenance fee information. Here are some details on what to expect from this area:
- The deductible amount is typically about 60% of total costs.
- The exact amount varies by building.
- Real estate taxes likely make up 40-55% of your deductible costs, while interest makes up the other 5-10%.
This information will be shared with you via your 1098 form from your building’s accountant or manager, so you don’t have to keep up on the details throughout the year unless you want to.
If you want to find out your deductible amount before your forms arrive in your mailbox, you can use the formula we put together here.
If you have an area in your home that is dedicated to your work, you’ve earned yourself another way to save at tax time. You can use the home office deduction to write off a portion of your mortgage, utilities, internet bill, and more.
Non-Deductible Co-Op Costs
Payroll Fees: The amount of your monthly maintenance fee is not tax-deductible, unfortunately. It does serve a purpose —bringing you the most convenient living— so it’s not the worst news in the world.
Costs of Repairs: Whether you’re repairing your own unit or a larger project is taking place for the good of the building, the costs are going to add up quickly. Unfortunately these fees cannot be deducted from your taxes, they might give you an edge if you ever decide to sell.
Even though tax time can be tricky, it’s important to understand co-op deductions to save yourself a few dollars while also playing by the rules. Listing appropriate items on your year-end report can make a big difference in the amount you pay — or receive back— after all.
If you have any questions about co-op living or real estate in general, please get in touch! We’re always happy to help you however we can!