The IRS states:
A qualified home includes stock in a cooperative housing corporation owned by a tenant-stockholder. This applies only if the tenant-stockholder is entitled to live in the house or apartment because of owning stock in the cooperative
In a housing co-op, you are actually purchasing stock in a privately held corporation — the corporation owns the building, and your share buys you the right to lease an apartment from the company where you are part owner. Unlike condos, townhouses or TICs (described next), a co-op is actually considered personal property rather than real property.
However, with a co-op you can deduct any part of the fee that goes towards property tax. This form of ownership qualifies you for income tax deductions available to other taxpayers who own homes. You can deduct the amount of mortgage interest you paid for a unit you own in a cooperative housing corporation.
You must reduce the interest by your share of any patronage dividend that the cooperative receives since this is a refund of mortgage interest paid in a prior year, and you must be able to itemize deductions. If the corporation provides you with a Form 1098, it should show only the interest that you can deduct.
For more info please visit: http://www.irs.gov/publications/p936/ar02.html#en_US_2014_publink1000229984
