Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: I'm debating between buying a condominium unit and a co-op apartment in New York City. Are there big differences in terms of what I’ll pay in property taxes?
Property tax "is imposed identically on condos and co-ops. The only difference between the two types of property is in how the taxes are paid," said Max Dilendorf, co-founder and head of the real estate practice at Dilendorf Khurdayan, a law practice in New York City.
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"Co-ops and condos in New York are classified as Class 2 properties," noted Gregory Akselband, founder of Gregory Akselband Real Estate Law, also in New York City. An owner’s share of the property taxes is calculated based on the unit’s size and location in the building, he said. Class 2 properties are residential properties that have more than three units.
With a co-op, "the real estate taxes are payable on the entire building and then allocated based on the percentage interest of the co-op owner," explained Paul Shapses, partner in the real estate group of Pillsbury Winthrop Shaw Pittman, a New York City law firm. Those fees are "embedded" in the co-op owner’s maintenance bills, he said. The co-op then pays the taxes to the city.
Condo units, on the other hand, have their own separate real estate tax payment and each condo owner pays their own taxes to the city, he continued.
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"In summary, there is no advantage to buying a condo over a co-op, or vice versa, with respect to property taxes," Mr. Dilendorf said.
However, Mr. Akselband observed: "Condos will typically have higher property taxes than co-ops. Condos are newer, larger, richer in amenities and thereby have greater market value."
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