by Gleb Lerman, The Affordable Oracle
We all note that many older buildings (pre-1980) are organized under co-op structure while the newer buildings are organized as condos. If asked why this historic divide exists one might jump to the conclusion that condo ownership structure was not legal prior to the 1980’s. In fact the condominium act has been in existence since the at-least 1909.
Turns out the real reason was that developer’s lost a favorable tax treatment with the passage of the Tax Reform Act of 1986. Prior to the Act a developer could dispose of a co-op and the income would count as a capital gain rather than as ordinary income and would thus be subject to a lower capital gains tax rather than the ordinary income tax.
So there you have it, the real reason why co-ops are not as popular as the used to be.
I found the answer in a document titled Offering Plan Checklist produced by the Law Office of John P. Bradbury @ www.nyrelaw.com
