Warren Gleicher Featured in Habitat Magazine on Converting Co-op Buildings Into Condominiums
Olshan Tax & Personal Planning partner Warren Gleicher was recently featured in Habitat magazine on the difficulties of converting co-op buildings into condo units. The conversion process is lengthy and complex but has become a growing trend because of the increasing value of condos in recent years (partly owing to the rise in construction of luxury condos). The co-op successively needs approval from a supermajority of its shareholders, the state’s Attorney General, and the Department of Finance to begin the conversion, which, as Mr. Gleicher reminds, is treated by the IRS as a sale, subject to capital gains tax for the coop corporation itself and for owners who do not use their coop apartment as their primary residence. However, he points out, the IRS has ruled that transactions wherein commercial owners convert from co-op to condo are treated as a “like kind exchange,” thus precluding the tax liability to the shareholder but there still will be a tax to the coop corporation.