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paying off a coop - input neededAug 28, 2007


we are 22 years into a 30 mortgage on a coop. we are also considering transfering it into a trust -

1) shall we pay it off and transfere it at the same time? there must be some advangtages to doing both at once.

2) are there really andy tax advantages to not paying off the mortgage? - the apt has increased in value 8 times over what we paid for it - maybe the interest is now so low it makes sense to just pay it off?

all input welcome - thanks.

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Whose mortgage? - Steve Aug 28, 2007


Eddie,

Are you referring to the corporation's mortgage on the building, or an individual shareholder's mortgage on his/her apartment?

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> Join the conversation Comments (1)
shareholder (nm) - Anonymous Aug 28, 2007



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ANYONE? (nm) - Anonymous Aug 31, 2007



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Paying off co-op, and trusts - AdC Sep 05, 2007


Your question is better served through a process of DUE DILIGENCE involving a CPA versed in Co-op accounting and a counsel that is also well-versed on trusts as a form of ownership to a multifamily property.

Obviously, different forms of ownerships have advantages and disadvantages. Taxes are not just the only consideration to examine. I think ability to obtain financing for capital programs is a main consideration: a co-op has different financial recourses than condos to provide structural preservation, but what about trusts? Would banks extend the same financing to trusts as to co-ops and condos? Also, the structure of a trust and a co-op will have to be investigated by way as to how ownership into the trust is to be transferred.

Re your question:

"2) Are there really and tax advantages to not paying off the mortgage? - the apt has increased in value 8 times over what we paid for it - maybe the interest is now so low it makes sense to just pay it off?"


My educated guess would be:

You have time to make an appropriate DUE DILIGENCE STUDY, identify appropriate CPA and Attorney to ensure that your decision is the correct one for the current shareholders and those who will buy in the future into the new form of ownership. Rather than rushing into an UNKNOWN the study should satify the current shareholders whose decision will be needed for the conversion of ownership.

Some considerations:

1 A benefits analysis should provide the foundation to sell the idea to shareholders as (1) they will lose the benefit of deducting the underlying mortgage as small as it may be (2) they may have to be assessed to immediately gain a higher value to the unit (3) reserves to improve the property may have to be used to retire the debt and convert to new ownership.

2. An engineering study should be made of your property to know your future capital program and with this determine reserves that the new ownership form should assume.


AdC



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you have no idea of the answer adc or what? - sally Sep 05, 2007


never have I seen such a confusing reply.

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Well you are not eddie - AdC Sep 05, 2007


If he were to tell me that, I would accept it! So, thank you for your comments. Perhaps is that you are too elemental.

AdC

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adc you really are loosing it and you used to be more reliab - sally Sep 08, 2007


dc - please bring back your old self

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To Sally re: ADC - Batch Sep 09, 2007


ADC is merely pointing out that
DUE DILIGENCE
is part of being a responsible board member

-- does anyone truly believe that
simply posting a question
on this forum
is a true substitute?

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Batch, due diligence - AdC Sep 10, 2007


The point is simple: the nature of the question raised goes beyond anyone's advice. As you well mention, don't expect an answer for this question through this forum.

The question is by far too complex and it involves many aspects that a board must consider.

Therefore, a TRUE DUE DILIGENCE work with compentent people, board involvement and ultimately shareholders will be necessary.

Thank you for addressing Sally's posture who it seems attained a B.S. decree in DIVINITY as a posting judge.

AdC

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