If you are an owner/stockholder of a cooperative housing corporation, you own shares of stock in a corporation that leases or owns housing facilities. Typically you can deduct your share of the corporation’s deductible real estate taxes just like a standard home owner. To qualify as a cooperative housing corporation, the business must meet the following conditions:
There is only one class of outstanding stock for the business
Each stockholder, solely because of ownership of stock can live in the dwelling owned by the corporation
No stockholder can receive any distribution out of capital, except when the corporation is partially or completely liquidated
Tenant-stockholders pay at least 80% of the corporation’s gross income for the tax year (income received during the entire year even if the corporation was not a cooperative housing corporation for the whole year)
To figure your share of real estate taxes (1) divide the number of shares of stock by the total outstanding (including shares owned by the corporation). (2) Then multiply the corporation’s deductible real estate taxes by the number you figured in one.
If the corporation received a refund of real estate taxes paid in a prior year, it must reduce the amount of real estate taxes paid this year when it allocates the taxes to each stockholder. Your deduction for real estate taxes paid this year will be reduced by your share of the refund the corporation received. For more information see IRS Publication 530.
Brian N. Stovall
Consultant - Accounting & Business Advisory
The Brico Group, Inc.