Co-op capital contributions

Forum|Forum|2 years ago
October 25, 2023
3 replies
39 views

I started a co-op this year. How are my capital contributions taxed? Is it based on the cumulative amount I have contributed or the ending balance in my account?

Ask the Experts - Extension - Sept 2023

KarenL4

Level 6

Hi, EmConger,

I am assuming you are talking about a co-op apartment you live in. Your capital contributions are not currently taxed at a federal level, rather they become part of the tax basis of your home and are part of calculating any gain or loss on the sale of your home (see this IRS publication "cooperative apartments" for more detail). Tax basis in a home, including shares in a co-op apartment, is the purchase price plus the cost of capital improvements. In a co-op, the starting point for an apartment’s basis is the amount paid for the shares in the corporation.

However, shareholders who use their apartments in a trade or business or to generate income, if the co-ops corporate documents permit such use, may also be entitled to depreciation and other deductions. Also, normal deductions such as your portion of property taxes and mortgage interest are available to you as with any other homeowner.

Hope this helps!

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Best,

Karen

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EmCongerAuthor

Level 2

Sorry that I wasn't clear before. I'm talking about a different kind of co-op. It's childcare and co-working combined. I'm a co-owner making capital contributions.

Will I be taxed on total contributions for the year or only the remaining balance in my capital account. How does the price of membership impact this? Thanks!