Is interest on a co-op apartment deductible?

Why co-ops need their own rule

In a cooperative you do not own real property. You own stock in a corporation that owns the building, and the stock gives you the right to live in a particular unit. The mortgage is normally the corporation’s, not yours. Publication 936 handles this by making stock in a cooperative housing corporation count as a qualified home when you are a tenant-stockholder entitled to live in the house or apartment because of owning the stock. Without that rule, the interest paid through your monthly maintenance would not be deductible.

What counts as a cooperative housing corporation

The corporation must meet every one of the following. It has only one class of stock outstanding. It has no stockholders other than those who own stock allowing them to live in a house, apartment or house trailer the corporation owns or leases. It has no stockholders who can receive a distribution out of capital other than on liquidation. And it meets at least one of three tests: at least 80% of its gross income for the year the interest is paid or incurred comes from tenant-stockholders; at all times during the year at least 80% of the total square footage of its property is used or available for residential or residential-related use by tenant-stockholders; or at least 90% of its expenditures for the year are for acquiring, building, managing, maintaining or caring for corporate property for the benefit of tenant-stockholders. If the entity fails these tests, the special rule does not apply.

Your share of the cooperative’s interest

As a tenant-stockholder you can generally deduct payments you make for your share of the interest paid or incurred by the cooperative. The interest must be on a debt to buy, build, change, improve or maintain the cooperative’s housing, or on a debt to buy the land. The publication gives the fraction: your shares of stock in the cooperative divided by the total shares of stock in the cooperative, multiplied by the total interest. The calculator above multiplies it for you. As an illustration, if you own 250 of 10,000 shares and the cooperative paid $400,000 in interest, your share is 2.5% or $10,000.

A loan you take to buy the shares

Many buyers finance their share with a loan secured by the stock. In some cases you cannot use the stock to secure a debt because of state or local law restrictions or restrictions in the cooperative agreement, other than restrictions whose main purpose is to let the tenant-stockholder treat unsecured debt as secured. The publication allows you to treat that debt as secured by the stock to the extent the proceeds are used to buy the stock, under the allocation of interest rules.

Patronage dividends

If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend the cooperative receives. The publication describes a patronage dividend as a partial refund to the cooperative housing corporation of mortgage interest if paid in a prior year. If you receive a Form 1098 from the cooperative, it should show only the amount you can deduct.

How the dollar limits apply

To work out the limits for grandfathered and acquisition debt, treat your share of the cooperative’s debt as debt incurred by you. The cooperative should determine your share of each type of debt, which equals the average balance of each debt multiplied by the same fraction used for interest. You then add your share of each type to the average balance of that type of debt secured by your stock. Most co-op owners fall under the limits, in which case the full interest is deductible. For the limits, see the acquisition debt page.

Reporting

The cooperative should give you a Form 1098 showing your share of the interest, and the publication says to use the rules in it to determine your deductible mortgage interest. Interest reported on the form goes on Schedule A (Form 1040), line 8a, and interest you paid but that was not reported goes on line 8b. You must itemize; the whether itemizing beats the standard deduction shows whether it makes sense.

Real estate taxes and other co-op items

This page covers interest only. Cooperative owners also commonly pay a share of real estate taxes, which have their own limit; the SALT deduction cap calculator explains the state and local tax cap. The mortgage interest deduction calculator is useful if you want a quick estimate of the tax value of a given interest figure. See also what is a qualified home.

Sources

• IRS Publication 936, Home Mortgage Interest Deduction (2025): “Special Rule for Tenant-Stockholders in Cooperative Housing Corporations”, plus the Reminders, Table 1 and Table 2. Read November 2, 2026.

Edition read: Publication 936 (2025), for use in preparing 2025 returns. Dollar limits in this publication are for 2025; the publication notes that tax legislation enacted July 4, 2025 (P.L. 119-21) may affect federal deductions, so check IRS.gov/Pub936 and the Schedule A instructions for your tax year. This page summarizes the publication and does not replace it. Marked for human review.