When you're looking at condos for sale, one of the major things you should be looking at is your condo fees. Your condo fees are going to have a significant impact on the affordability of your home, and it will impact the amount of home your lender is willing to finance.
Condo Fees Can Change At Any Time
Condo fees are generally changed at the end of the fiscal year, but they can be adjusted at any time, especially if there are special assessments. Moreover, condo fees can be adjusted upwards to any amount, provided that the association of apartment owners can show that there is a reason for this amount. When looking at condos, you should pull the condo docs to see how the fees have historically increased.
Condo Fees Are Set by the Board of Directors
The board of directors of the association decides whether condo fees should increase. Condo fees can also decrease, but this is rare. The association essentially determines the cost of keeping up the common areas of the apartment complex. This cost is then distributed in an equitable way among apartment owners, usually based on square footage when there are multiple sizes of units. If you have issues with condo fees, you'll have to contact the board.
Condo Fees Can Result In a Lien
If you don't pay your condo fees, not only could you be taken to court, but a lien can be put against your property. This means that you won't be able to sell your property until the condominium fees have been fully paid off. Condominium fees are often pursued rather aggressively and many associations have a lawyer on staff to make sure that apartment owners pay their fees regularly. Some mortgage companies may insist on taking in escrow payments with the mortgage to continue the payment of these fees.
Condo Fees May Not Always Be Deducted
Condo fees can be deducted from rental income as a business expense if you are renting out a condo. But condo fees cannot be deducted from your own personal income if you are living within the property, the way mortgage interest can be. Don't count on a tax deduction at the end of the year if you're purchasing a condo as an owner resident.
Condo fees are an incredibly important aspect of condominium buying. Your real estate agent can give you more of an idea regarding the condominium fees that are normal in your area and whether the condos you're looking at may be unusually high. For more information, consider contacting companies like Berkshire Hathaway HomeServices PenFed Realty.