What determines % of maintenance that's tax deductible?

Co-op's differ from condos in the monthly overhead because co-op's include taxes and a possible underlying mortgage in the monthly charge as one package on top of overhead expenses. A condo only includes the overhead expenses in the monthly charge. I own a condo and have never owned a co-op, so I am not sure on all of the correct details- but I believe the tax deductibility on the maintaince (40-60% that you see) is due to the underlying mortgage on the building. If you were to buy a co-op apartment you would typically have a mortgage for your apartment (which is tax deductible) as well as a mortgage on the entire building which is in your maintenance (also tax deductible).

Co-op's monthly fees are called maintenance and it includes all overhead, property taxes and the mortgage on the building. A condo's monthly fees are called common charges- and only include the overhead. A condo's common charges are not tax deductible, however an assesment for capital improvements toward the building could be. A condo can take a loan for improvements, but as I understood it, the structure can not have a mortgage.

Perhaps a tax expert can correct me, but I would believe that a home business could be deductible in both a condo and a co-op (although any home business deduction is a red flag for an IRS audit- even if it's legit).

OK, but if a co-op's underlying mortgage is why its maintenance is tax deductible, does that deduction continue AFTER a mortgage has been paid off?

I went to this co-op apartment, and was told the maintenance is 43% deductible, AND it's mortgage was fully paid! So how does that work ?

My understanding is that both mortgage interest and property taxes are included in calculation the percentage that is deductible. Problem is these two aren't equivalent, since (if I'm remembring correctly) property taxes are note deductible if you're in AMT, but mortgage interest is (so the percentage is actually lower for people paying AMT).

Sticky,

That probably means that the "43%" includes property taxes.

Coop owners receive statements every year from the management company breaking out how much of what you've paid was property taxes and how much was interest. This way, if you're AMT you have it all right there.

If you want to compare condos w coops, just add together common charges & prop taxes with a condo. Coops include all if it in the maintenance.

This is what the official letter from the coop looks like which explains exactly what's tax deductible:

https://www.hauseit.com/sample-co-op-tax-deduction-letter-nyc/

Always recommend looking at the official text …

And a higher % is not necessarily better, do you want more of your monthly $s to go to the gov't and the bank?

The simple answer is:
In a condominium, your "monthlies" are common charges + real estate taxes.
In a coop, your "monthlies" is maintenance (which = common expenses + real estate taxes + underlying mortgage).
In both cases, real estate taxes and mortgage interest (whether on the loan for your individual unit for the whole building) are tax-deductible (up to certain caps).
The biggest difference is that in a coop you make a single payment each month to the corporation which owns the building, and then they pay all the expenses, where is in the condominium you pay the Owners Association for the building expenses and your own real estate taxes separately.

Also in the case of a land lease Co-op, since the building doesn't pay real estate taxes directly, you miss out on the benefit of them being the ductable and the tax deductibility is usually very low.