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Compare Co-op Types

LEHC and RON

 

Comparing LEHC and RON within a Community Land Trust

 

Resident Operated Nonprofit (RON)

Limited Equity Housing Co-op (LEHC)

 

Who owns?

 

The RON

The LEHC

 

What is the structure?

 

A RON is a non-profit corporation that owns housing.  Members live in that property, but there are some outside board members.

A LEHC is a non-profit corporation that owns housing, all of the members live in that property,

 

What do members own?

 

Members do not have a direct ownership stake. 

A share in a co-op that entitles you to live in a unit.

 

Who manages the building?

 

The RON. The community land trust has some oversight.

The LEHC. The community land trust has some oversight.

 

Who runs the co-op?

 

A board of directors elected by RON members.  May include one or more members who do not live at the co-op.

A board of directors elected by LEHC members. 

 

Who do you make rent payments to?

 

To the co-op.

To the co-op

 

What affect on your income taxes?

 

No tax benefits

Deduction for proportional share of coop's mortgage interest and property tax.

 

What affect on your property taxes?

 

May qualify for welfare tax exemption, which is a major reduction in taxes

Does not qualify for welfare property tax exemption.  Likely to qualify for homeowners exemption, which is much smaller reduction

 

Who pays property taxes, mortgage, insurance, etc?

 

The co-op

The co-op

 

Advantages?

 

Control over the place where you live and control over things like maintenance and house rules.  May qualify for property tax exemption.  Not required to apply for approval by DRE.  Often cheaper to move in, since there is no share purchase, only security deposit.  Interest paid on security deposit.

Control over the place where you live and control over things like maintenance and house rules. You also get full value of your share, plus interest when you move out, and a possible annual deduction on your income taxes.

 

Disadvantages?

 

Not true ownership. No income tax deductions.

LEHC often requires a complex and expensive application to the Dept of Real Estate. 

 

 

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