What's Included in Co-op Maintenance Charges?

(MoneyWatch)  Dear Ali;
I'm shopping for a co-op and I'm puzzled by the "maintenance" charges. Are these like the monthly charges on a condo? Are they tax-deductible?
A: Thanks for this question from our friends on the Redfin blogs (Hi Mike!). Unlike a condo, where you own a physical apartment, when you buy a co-op, you own shares of a corporation. It's like buying a little bit of GM, only you can live in it. Your maintenance charges pay for physical maintenance of the building (such as roof and boiler maintenance) and for salaries and benefits for the building's staff (super, porter, groundsmen, etc.) Those expenses are not tax deductible.

However, in a co-op, the underlying real estate taxes on the building (which in a condo are separately billed to each unit owner) are paid by the corporation and then pro-rated to each unit owner. That is a tax-deductible expense. Also, if the building has an underlying mortgage, your pro-rated share of the mortgage interest is tax-deductible, too.

Sometimes this info is written into the listing (for example, "maintenance $1,002, 47% T.D.") but if it isn't, ask the listing agent to provide you with the percentage so you can budget. Once you own, you'll get an annual letter from the corporation giving you tax-deduction specifics.