A flip tax is a fee that a New York City coop charges when a shareholder sells an apartment. The seller usually pays it, the building sets the amount, and the money goes into the coop funds. Knowing the flip tax before you list or buy helps you avoid a surprise at the closing table.

What exactly is a flip tax?

Despite the name, a flip tax is not a government tax. It is a transfer fee created by the coop itself and written into its rules. Buildings use it to build reserves, pay for capital projects, and keep monthly maintenance lower for everyone who lives there. Because each coop decides its own policy, the rules from one building can look nothing like the rules from the next.

How is a flip tax calculated?

There are several common methods. Some coops charge a percentage of the sale price. Others charge a set amount per share, or a percentage of the profit the seller makes. A few use a flat dollar amount. On a sale of one million dollars, a two percent flip tax would equal twenty thousand dollars, which is a real number that belongs in your net proceeds estimate.

Who pays the flip tax?

In most buildings the seller pays it. However, the building rules or the contract of sale can assign it differently, and some buyers negotiate to share the cost. The best approach is to read the building rules early and confirm the payer in writing before the contract is signed.

Do condos have flip taxes?

Condos rarely charge one because condo owners hold real property and boards generally have less power to restrict or tax transfers. Some condos do charge similar fees, often called capital contributions, so always ask the managing agent what fees apply at resale.

How should sellers and buyers plan for a flip tax?

Sellers should request the exact flip tax formula from the managing agent before setting a price. Then build it into the net sheet so the number on the offer matches the number you actually keep. Buyers should remember that a building with a flip tax may have healthier reserves, which can protect against special assessments later. A flip tax is a cost for the seller today, and it may be a benefit for the buyer tomorrow.

Working with the best realtor in New York means having a team that reads building documents before the listing goes live, so nothing catches you off guard. We review the proprietary lease, the house rules, and the financials with every client before a price is set.

What documents show the flip tax?

What does a flip tax look like on a real sale?

Consider a coop apartment that sells for seven hundred thousand dollars in a building with a one percent flip tax based on the sale price. The flip tax would be seven thousand dollars. Now consider a building that charges three percent of the profit. If the seller bought for five hundred thousand dollars, the profit is two hundred thousand dollars and the flip tax is six thousand dollars. Two buildings, two formulas, and two different results, which is why the details matter.

Sellers sometimes forget that the flip tax comes on top of agent compensation, attorney fees, and other closing costs. Ask your agent for a net sheet that lists every item so you see your true take home number before you accept an offer.

What questions should you ask before you list or buy?

• What is the exact flip tax formula and when was it last updated?
• Is the flip tax paid by the seller, the buyer, or split?
• Are there exemptions for transfers to family members or estates?
• How does the building use the money it collects?
• Are there other transfer fees, such as move out fees or application fees?

The answers tell you how the building manages its finances. A coop that collects a flip tax and keeps strong reserves may be better prepared for repairs than a coop that does neither. That insight helps buyers compare buildings with more confidence.

Can a flip tax change?

Yes. Boards and shareholders can vote to change the policy, so the rule that applied when you bought may not be the rule that applies when you sell. Confirm the current policy in writing when you list.

Look in the proprietary lease, the coop bylaws, and the building financial statements. The managing agent can also provide a summary. Your attorney will confirm the details during contract review.

Frequently Asked Questions

Is a flip tax the same as a transfer tax?

No. Transfer taxes are charged by the state and city. A flip tax is charged by the coop itself.

Can a flip tax be negotiated?

The building sets the fee, so the amount is usually fixed. The buyer and seller can negotiate who pays it.

Where do I find the flip tax amount?

Ask the managing agent or review the proprietary lease and building rules. Your attorney can confirm before you sign.

Do family transfers avoid the flip tax?

Some buildings exempt certain transfers, such as to a spouse or child. Check the proprietary lease.

Does the flip tax appear on the listing?

Sometimes, but not always. Ask your agent to verify it with the managing agent.

Ready to make your move in New York? Call the REHUB Team at 718-550-6497 or visit REHUBTEAM.com. Work with the best realtor in New York and get a clear plan built around your goals.

This article is for general information only and is not legal, tax, or financial advice. Programs, rates, and rules change, so confirm current details with the right professional before you act.