Condo or Co-Op? Which One Is for You?

Read about the differences, then take our interactive quiz to discover the option that is right for you.

If the responsibilities of being a homeowner have become humdrum, it might be time to make a move. Or maybe you’re looking at buying a house but think the regular maintenance is more than you, or your schedule, can handle.

Does this sound like you? Then a condominium or co-op might be the right fit. Both offer the benefit of not having to handle routine upkeep—but, like anything, there are some cons to go with the pros. Plus, condos and co-ops are not created equal.

Here are some of the basics you need to know.

Ownership. Buying a condo means you own the real estate, including an interest in common areas like lawns. When you buy into a co-op apartment, you’re buying a portion of the building. A co-op board will often have to vote you in as a new owner—and approve whomever you sell to, which can be time-consuming. Also, condos and co-ops can both have strict rules about everything from flower planting to paint colors and other home improvements, so read the fine print (as you would anyway).

Fees. Condos and co-ops both charge maintenance fees, usually on a monthly or quarterly basis. This covers costs like lawn mowing, snow removal and certain routine maintenance. Fees are often higher in a co-op but sometimes include items like utilities. However, co-ops are less likely than condos to charge special assessments for things like capital improvement projects. Either way, maintenance fees should be factored into your monthly expenses. Keep in mind that they may increase over time.

Property taxes. Condos are individually owned, so owners are taxed separately just as they would be in a single-family home. Co-ops are considered a single property, with a single property tax assessment, which is split among the owners and usually included in the maintenance fee. Property taxes are typically lower on co-ops than on condos.

Tax deductions. If you own a condo, you can deduct the full amount of mortgage interest and property tax payments just as you would in a single-family home. Co-op owners can only deduct their share of property taxes and interest on the underlying mortgage on the entire property that’s rolled into their maintenance fee.

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