Home Buying in Brooklyn>Question Details

AMRWJ, Home Buyer in Brooklyn, NY

How to calculate the percentage of tax deduction for co-op maintenance fees?

Asked by AMRWJ, Brooklyn, NY Thu Jan 20, 2011

Hi Everyone,
I am a first time homebuyer purchasing on the very low end in Brooklyn so I appreciate your help. I am trying to determine the tax deductibility of the maintenance charges on a co-op unit. Monthly maintenance is $318. The unit comes with 26 shares. As of 12/10, the per share amount for real estate taxes was $4.8273. The mortgage interest per share amount was $3.6848. Can you help me understand how I take those numbers and compute how much of the monthly maintenance is tax deductible? Normally, units are advertised as being "50% maintenance deductible" or some such and these numbers are unfamiliar to me. Thanks so much.

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Answers

7
Annually you should receive a statement with the deductions for taxes and interest you itemized on your tax return.

The statement will normally be mailed by the management company or left under the door.

An accountant can fully explain each itemized deduction but realize the amounts may vary year to year due to various reasons (re-financing of the co-op's mortgage may reduce interest expenses).

David Rogoff and Bonnie Chernin
Fillmore Real Estate Branch #19
davidrogoff@fillmore.com
bonniechernin@fillmore.com
917-593-4068 (CELL)
1 vote Thank Flag Link Tue Apr 26, 2011
Hi Alex I see you have the answer tho your question so no need for my help. However I want to know which affordable Co Op unit are you in. I ask because I am in search please help if you can thanks in advance
0 votes Thank Flag Link Mon Feb 27, 2012
Since you state below "I hope someone can clarify which approach is correct"--do keep in mind that you can ask management for a copy of your taxable deductions, and do consult with your tax professional as well.
0 votes Thank Flag Link Thu Jan 20, 2011
Thank you very much for your input, everyone, though I have to admit I am very confused--there's a lot of difference between 17% and 69%! I hope someone can clarify which approach is correct.
0 votes Thank Flag Link Thu Jan 20, 2011
Dear Alexis:

Normally the numbers you mentioned ($4.8273 and $3.6848) are per share annually but not 100% of the time, you need to find out if those numbers are based on annual or monthly. Assuming they are based on annual, the calculation goes as follows: $4.8273 + $3.6848 = $8.5121 per share, 26 x $8.5121 = $221.3146. Hence the tax write off based on the number of shares is $221.00, I do not know if that is annually or monthly, you have to check with the management company on that. If it is annually, that means the write off would only be about 5.5%, if those numbers are based on monthly, then $221.00 x 12 = $2652.00 which would be about 69%. This percentage can vary greatly from co-op to co-op on a case by case basis, it is based on the interest paid on the underlining mortgage and real estate taxes on the co-op building as a whole.

Keep in mind that if you took a mortgage for your self when you purchased the co-op, their interest on that mortgage also becomes a tax deduction for you assuming that this is your primary residence. If I can be of further assistance please let me know. Good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Jan 20, 2011
Your yearly Maint. is 12X $318= $3816.
Your unit's annual R.E. tax + Mortgage Interest is 12X 26X ($4.8273+$3.6848)=$2655.78
Your deductibility is $2655.78/$3816=69.5%
0 votes Thank Flag Link Thu Jan 20, 2011
Hi Alexis
At the end of the year you will receive a tax form(similar to a W2) from your management company which will give you all of your taxable deductions that is the only way to have the correct figures.
0 votes Thank Flag Link Thu Jan 20, 2011
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