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Readers' forum : Co-op conundrum

11 July 2017
Issue: 4607 / Categories: Forum & Feedback

Can housing co-operatives pool their resources without adverse tax problems?

We are a group of fully mutual housing co-operatives that wish to create a vehicle to pool the resources of older mature co-ops whose loans have been paid off. The aim is to pay off the outstanding mortgages of younger member co-ops thus saving money collectively on mortgage interest.

The vehicle (let’s call it The Pool) would receive monthly or quarterly contributions from all members according to a formula based on for example equity rentable rooms and market rent in their area. In return it might send out irregular newsletters and organise an annual networking event and possibly some training. It would also lend money to some of its members – the monthly or quarterly contributions would therefore include a loan repayment portion.

At present fully mutual housing co-ops in common ownership obtain a corporation tax exemption. We are therefore keen not to...

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