How much money will you profit from the sale of your New York City co-op, condo or brownstone? In addition to paying off any outstanding balance on your mortgage, remember to deduct closing costs, flip tax (if your building has one), and capital gains taxes. As a general rule, expect to pay around 8 to 10% of the sale price, about twice as much as buyers pay, and that's before capital gains tax you may owe.
Broker’s fee: Expect to pay 5 to 6 percent of the sale price to your broker (which will be split with the buyer’s broker if there is one). On a $1 million sale, that’s $50,000 to $60,000.
City and State Transfer taxes: Sellers pay a state and city combined transfer tax of 1.825 percent if the sale is over $500,000, or 1.4 percent if it’s under $500,000. On a $1 million sale, that’s $18,250. If your home sells for $3 million or more, the tax increases by .25 percent.
Flip taxes: To support building reserves and capital improvements, many co-op and condo buildings also levy flip taxes paid by the seller ranging anywhere from 1% to 5% of the purchase price. On a $1 million sale, that’s $10,000 - $50,000 in flip taxes.
Attorneys fees: Expect to pay around $2,500 - $3,500 for attorneys fees on a standard transaction.
Real estate capital gains taxes: The profit you make on selling your apartment or townhouse may be subject to federal capital gains tax of 0 to 20% depending on your income level. Additionally, if you earn over $200,000 per year (or $250,000 for a married couple filing jointly), you may be subject to an additional Net Investment Income Tax of 3.8%. You will also need to pay regular New York State and City income taxes on your profit. The good news: If you are selling your primary residence and have lived there for at least two of the last five years, you won’t have to pay taxes on the first $250,000 of your profit if you’re single, and $500,000 if you’re married filing jointly. You can also lower the taxable amount by deducting closing costs (including broker fees) and capital improvements costs during the time you’ve owned the property (your own renovation or amounts assessed by your co-op or condo building). Bottom line: Consult your tax adviser before assuming you can keep or re-invest all of the profit from your sale.