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Talk » Financing » Discussing 'What happens at the end of the Co-op's mortgage?'

What happens at the end of the Co-op's mortgage?
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Hi,

Sorry if this a dumb question, but I'm currently looking to buy a unit in a building whose mortgage expires in June 2013. They have been paying down principal throughout the life of the mortgage, so there isn't a balloon payment or anything.

Does this mean that the co-op will be mortgage free in 2013, like a person would be, once they paid off their mortgage. I've never seen a co-op without a mortgage, so this sounds strange to me.

Thanks in advance for your help.

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So when in a coop listing you see "Building just paid off mortgage" like it's a good thing is that not necesarily the case?

Also does this affect how much of maintainence is tax deductible? I had sort of figured a portion of maintenance was tax deductive because it was essentially the underlying mortgage but if no mortgage does this mean 0% of maintainanec is tax deductible?

your % of property tax would still be deductible

Dominic: this is a very good thing. Your mtce will decrease by a sig. amount, and your co-op won't have to worry about increasing interest rates as much. If they need to, the co-op might get another loan in the future for capital projects/major repairs. Most co-ops do not pay off their mtges, and this can be a dangerous thing as major repairs become needed and interest rates rise.

@bernie, maintenance is essentially:

* Labor (doorman, porter, supers);
* Building upkeep (big repairs like roof and hallways, everyday stuff like changing lightbulbs in lobby);
* Underlying mortgage, and
* Property taxes.

#3 and #4 are deductible, and usually make maintenance work out to 50 -60% T.D. Without #3 as a factor, villager is right, #4 is still deductible, so it's probably in the range of 20-25% T.D.

I just placed clients in a UWS building that will have its underlying mortgage paid off in 2014; at that point, the building will have to decide whether to lower maintenance, or keep the maintenance as is and use the $$ to add a part-time doorman or a roof deck.

ali r.
DG Neary Realty

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Great, thanks everyone for your responses. They have been very helpful.

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