Eva Talel and Richard Siegler ()
Co-op boards help their shareholders with many issues; however, one important benefit which boards should provide—but which many don’t—is facilitating apartment tax basis adjustments for shareholders, ideally on an annual basis. Tax basis in a home, including shares in a co-op apartment, is the purchase price plus the cost of capital improvements. In a co-op, the starting point for an apartment’s basis is the amount paid for the shares in the corporation.1 When the apartment is sold, the seller must pay taxes on profits over $250,000, or $500,000 if married filing jointly.2 To determine the amount of profit, subtract the tax basis in the apartment from the sale price. Therefore, as tax basis increases, the amount of taxable gain decreases.
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