The Market

The perfect flip tax? 2% of sales price

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By Teri Karush Rogers  |
April 29, 2011 - 7:07AM

It's no secret that more and more of NYC's property-tax battered co-ops are passing the buck by levying flip taxes on the sale of apartments.  In fact, about two-thirds of 186 co-op boards surveyed in the May issue of Habitat Magazine say they have a flip tax (a.k.a. transfer fee). But the types and amounts vary vastly.

Some flip taxes take a percent of profit (vs sales price), which can get tricky if sellers are allowed to subtract the cost of improvements. (A 900-unit co-op in Morningside Heights apparently charges a "whopping" 15% of the net profit.) Other flip taxes go by how many shares are allotted to the apartment, which doesn't account for inflation.  

Being notoriously hard to implement or change (usually requiring a 2/3 vote of shareholder), it's important to get the flip tax right the first time.

The magic number, according to a property manager quoted in the Habitat article (not yet available online), is around 2% of the total sales price: "This percentage seems just high enough to make a positive difference for a building's reserve account and just small enough to feel manageable."


Related posts:

How to persuade your board to adopt a flip tax

Flip tax reprieve

Teri Rogers Headshot - Floral

Teri Karush Rogers

Founder & Publisher

Founder and publisher Teri Karush Rogers launched Brick Underground in 2009. As a freelance journalist, she had previously covered New York City real estate for The New York Times. Teri has been featured as an expert on New York City residential real estate by The New York Times, New York Daily News, amNew York, NBC Nightly News, The Real Deal, Business Insider, the Huffington Post, and NY1 News, among others. Teri earned a BA in journalism and a law degree from New York University.

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