What Is A Flip Tax In NYC?
- Discourage flipping
- Generate funds for building improvements by taking a piece of the profit apartment sellers were making.
How Much Flip Tax Is Common In NYC And Who Pays It?
What Type of NYC Buildings Have A Flip Tax?
- Percentage of the price you sold your unit for (like 2% of $700,000)
- Percentage of the profit you sold your unit for (like 10% of the $250,000 profit you made)
Flat fee ($30,000)
- An amount based on your shares in the co-op ($100 per share – The larger your apartment, the more shares you will have and will bear a higher flip tax)
- A combination of two or more of the above
Flip Tax – Pros, Cons, and Uses
- They discourage frequent flipping, and more people keep the co-op for longer periods, ensuring stability.
- They generate income for the building. Even if people flip, they leave after paying substantial amounts as transfer fee/flip tax, which can be used for capital improvements without burdening the residents unnecessarily. That’s a pro for the residents, as money collected from flip taxes can reduce their maintenance costs or their share of the capital improvements in the building.
- They have to give away a sizable piece of their profits.
- It may make their property unappealing for people who are buying for a relatively short term. They either won’t consider the apartment or offer a reduced amount (to cover the flip tax).