A mortgage principal payment (not interest or taxes) is merely a conversion of cash asset into real property asset, which is why it is not an expense of the cooperative. The value of the real property asset is still there and the principal payment converts to equity into the real property, so that principal payment does not really leave the cooperative, it is just converted from cash to equity. Debt represents amounts that a corporation owes, and that it must reimburse, but when that debt is converted to equity in the property there is no real cash income or expense it is just changed from the amount of debt owed to the lender to an increase in equity in the property owned by the association.
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