Dec 29, 2018

Flip Tax is a Private Transfer Fee

The NYC Flip Tax

Q: What is a Flip Tax?
A:  A private Transfer Fee

The flip tax is not a tax from the government it is a private transfer fee that many new york coops impose on shareholders. In the late seventies and early 80's when many rental buildings converted, huge profits were being made by former renters who bought their units at inside prices and then resold them. Called "flipping" The boards decided to impose the transfer fee and call it a flip tax on sellers to dissuade flipping.

Due to high costs of operating and maintaining their buildings, many coops and condos need to build their reserve fund by imposing a flip tax usually imposed on sellers.

A flip tax is a restrictive covenant All co-ops and 99% of Manhattan condos have restrictive covenants. "A provision in a deed limiting the use of the property and prohibiting certain uses". A coop’s flip tax can affect the maximum loan amount a bank extends to a buyer

Condo and condop buildings can also legally have a flip tax. Although not as common as in coops.
The terms "limited equity" or "shared equity" are terms related to the flip tax. A seller's equity is limited and or shared with the housing corporation via the flip tax.

HDFC coops (a NYC affordable housing program) usually have a flip tax as a way to maintain the building and keep the building affordable. An HDFC flip tax can be as high as 50% of the profit.

Type of Flip Tax
  1.  A percentage usually 2% but sometimes 3%
  2. A flat fee
  3. Percent of profit
  4. Dollar amount per share


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