Biggest impact of 80-20 rule change yet to be felt

After literally decades of campaigning by the Council of New York Cooperatives and Condominiums, as well as others, a limitation on the amount of money that a co-op building can collect in rent from commercial (technically, patronage) operations was changed in December 2007 starting that tax year.

The impact of what was an expanded definition of “cooperative” has yet to be fully realized, though there are isolated instances of occasionally enormous benefits.

Until it was changed, the so-called 80-20 rule prevented cooperatives from enjoying a tax deduction for their expenditures on property taxes and mortgage interest if their income from retail stores, garages and such exceeded their operating budgets by 20 percent.

As a result, many commercial tenants were paying a pittance in rent, including nothing in the case of a few nonprofits such as, say, thrift shops.

With a new, more comprehensive definition of “cooperative” in the revised IRS rule, buildings now can permit the budgetary contribution of commercial rent to go over 20 percent.  Continue reading

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Co-op owners, hang onto your hats and wallets

You’re in for a rough ride.

If you have already received notice of a January maintenance increase, maybe you’re thinking of moving.

Don’t bother: Thanks largely to property taxes, most residents of co-ops and condos in New York City face a punishing boost in their monthly housing costs as early as next month.

If you own an apartment, look at the column labeled "Class 2."

Do the rates depress you?  It gets worse if you go farther back in time: Continue reading