Co-op Closing Costs -- If Paterson Wins

IMO, this is absurd. The fact that in a coop you own shares that are not real property is not a "loophole" - its an important legal distinction that is undermined by this proposal.

One of many instances where our govt is changing rules as we go(post crash trend).
The europeanization (tax wise) of our city/state/country will destroy this country's economy more than any other factor.

I worry for co-ops in general. The other Bloomberg fiasco effecting all co-ops and condos are that they keep on raising the appraised value of residential buildings thus raising the taxes thus raising the maintenance costs we all must bear.... So - Now if this happens and folks have to pay mortgage taxes on a co-op loan......I think it will make co-ops a tougher sell.

I am not happy.

No way this passes.

This had better not pass, if they need extra $ how about reigning in the MTA, god knows how much city revenue goes to that pit of despair.

seeing paterson and wins in the same sentence made me chuckle. whatever you think of the man he is so not going to last past this election.

I don't understand what the "important legal distinction" between coops and condos has to do with tax policy. Transfer taxes are designed to generate revenues. The exclusion of coops from transfer taxes is not based on any tax or other sound policy. The government could just as easily say that coops are not realty but personalty and each sale is thus subject to 8.375% sales tax. Be careful what you ask for.

nyc_sport -- Coops pay Transfer taxes too. NYC and NYS just like Condos. We are talking MORTGAGE recording taxes which are based on the transfer of real property. When you buy a coop, you are NOT buying Real Property. You are buying shares in a cooperation that allow you to live in a specific space for a specific leasehold period.

And NYC Sales Tax is 8.875 now. Which has nothing to do with the sale of property either.

Get a clue and come talk to us in the forum again.

When you buy or re-finance a coop you are mortgaging a leasehold interest in your home. When you buy or refinance a condo you are mortgaging a real property that is either your home or an investment. Since we are basically talking about two different legal forms of peoples homes, why should the condo mortgagor be taxed and the coop mortgagor be spared? (Aside from the obvious self-interest arguments)

"The other Bloomberg fiasco effecting all co-ops and condos are that they keep on raising the appraised value of residential buildings thus raising the taxes thus raising the maintenance costs we all must bear." Older condos and coops that have RS/RC tenants pay some of the cheapest taxes in NYC. It is about time that a city administration does something for the overall fairness of the property tax burden. Why should the owner of a newer condo studio pay the same property tax burden as the owner of a much larger prewar one bedroom or even a two bedroom? As the city puts more data on ACRIS, the lack of fairness with respect to the tax burden becomes easier for all to see.

There is no reason for co-ops to be mortgage tax exempt if you have a mortgage.

What's the rationale for having a mortgage tax to begin with? Seems like a regressive tax to me. Why not just raise the transfer tax and eliminate the mortgage tax?

Sure seems to me like a mortgage tax punishes Average Joes and Janes (often multiple times, if they need to refinance) while letting those rich enough to pay cash for their home off the hook.

From a tax policy standpoint, I do think co-ops and condos should be treated equally, but I don't like the idea of a mortgage tax for either.

"We are talking MORTGAGE recording taxes which are based on the transfer of real property. When you buy a coop, you are NOT buying Real Property."

But you have a MORTGAGE, no?

BTW, really want to take it far? How about we get rid of the mortgage interest deduction for co-ops?

Still want to play this game????????????

PMG hit the nail on the head. It's not about the legal definition of co-op or real property, it's about taxing mortgages. I expect that this will happen in the not too distant future regardless of who gets elected (politicians borrow ideas from each other all the time). And it will pass; the law principally affects NYC, and Albany will always take more money from NYC. that being said it is a regressive tax that penalizes those requiring financing, so like lad said I would much rather that Albany get rid of the mortgage tax and tax all real estate transactions the same.

Why worry about what would happen if Gov. Patterson got reelected, when there's a snowballs chance in hell of that happening. Now if you told me Andy Cuomo was supporting it...

Guess I want to know what would be the difference between a coop and a condo if they start becoming taxed equally? (Besides the obvious of condo = real property/coop = shares)?

"Guess I want to know what would be the difference between a coop and a condo if they start becoming taxed equally?"

The biggest advantage is that in a co-op, you get to keep out the riffraff.

"Guess I want to know what would be the difference between a coop and a condo if they start becoming taxed equally?"

The biggest advantage is that in a co-op, you get to keep out the riffraff.

Au contraire Matty Boy! In a condo your largest financial investment purchase or sale is not controlled by psycho co-op board members. Anyone who can get a mortgage these days has been pretty well screened out from the riffraff by their friendly mortgage lender.

Love streeteasy. There's one thread on Rent Stabilization being bad. One thread on coops being bad. One thread about Israel. One thread of a bunch of nutcases chasing each other around the next get together.

"Anyone who can get a mortgage these days has been pretty well screened out from the riffraff by their friendly mortgage lender."

Clearly, they have not, given the number of mortgages extended to people who clearly couldn't afford them in the first place.

Somewhereelse hit a key point: Interest on coop loans is deductible, so it's logically consistent to make coop loans subject to recording tax too. (Call it "coop loan recording tax" if the semantic distinction between loan types bothers you.)

Whether it's good public policy is a separate question. Would it affect values? Absolutely. Is that a problem for buyers? No, it's basically a wash for buyers: lower prices vs. higher closing costs. It's a problem for people who own coops when the law changes.

I just love a thread where it is easy to figure out who owns a coop and who does not. Look, I own neither but there is really no valid justification for condo's to be taxed for mortgages and not coop's. It is the definition of a loophole. Now, if we want to rail against the entire concept of a mortgage recording tax, fine. However, to those who seem aghast at the equity of imposing one on coop's while being ok w/ the tax on condos, frankly, crack me up. I also like the shock by some who can't believe this tax would also apply to refinancing and not just initial mortgages. That is precisely how it applies to all other mortgages. I can only assume coops have been spared this long because NY, historically, was a coop town. Now that more and more condos are being built I imagine it is a much easier sell -- again, as a matter of equitable tax treatment.

Personal view, this will pass and have a modest effect on coop pricing. It will be priced in like any other closing cost of the transaction.

There’s nothing logical or fair about NYC property tax policy. Co-ops are taxed more favorably than condos, houses are taxed more favorably than co-ops, and abated or exempted condos are taxed more favorably than co-ops. Every so often the City raises changes to tax structure to penalize one property class more heavily, so that things equal out. It’s like Ernie sharing licorice:
http://www.youtube.com/watch?v=HgnDRbXslwQ

since NY is attempting to make the mortgage tax "fair" for all, why don't they re-examine the "mansion" tax as well, and raise the threshhold? Taxes are based on a rising assessed value - It is not consistent or fair to hold the bar steady as to what defines a "mansion". NY/NYC tax law if full of BS like this.

And I'll keep asking on tax related threads as a friendly public service reminder ....Why is Charles Rangel not in jail?