Flip Tax
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A flip tax is a fee paid by a seller or buyer on a housing
co-op A cooperative (also known as co-operative, coöperative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democr ...
transaction, typically in
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
. It is not a tax and is not deductible as a
property tax A property tax (whose rate is expressed as a percentage or per mille, also called ''millage'') is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or Wealth t ...
. It is a transfer fee, payable upon the sale of an apartment to the co-op. Flip taxes are considered a method to help raise money for a co-op's overhead expenses without raising the maintenance fees or assessing flat charge to all residences. Charging the fee to those who are leaving the building seems to be the most politically feasible.


Types

: ''Source:'' * Flat fee * Dollar amount based on shares allocated to the subject apartment * Percentage based on the sales price * Percentage based on the net profit of the sale * Fee based on the duration the seller has owned the apartments — shorter time periods of ownership typically bring higher fees


Legality

The imposition of flip taxes in New York City has been supported in the courts. The
New York State Legislature The New York State Legislature consists of the Bicameralism, two houses that act as the State legislature (United States), state legislature of the U.S. state of New York (state), New York: the New York State Senate and the New York State Assem ...
in July 1986 acted on a proposal from the Council of New York Cooperatives and Condominiums and defined in what way co-ops could legally impose these fees. Specifically, the law allows such an assessment if either of the following applies: # if it is sanctioned in the co-op's proprietary lease # if the lease is amended with more than two thirds of shareholders approving. Flip taxes appear to be legal for condominiums in New York City and
New Jersey New Jersey is a U.S. state, state located in both the Mid-Atlantic States, Mid-Atlantic and Northeastern United States, Northeastern regions of the United States. Located at the geographic hub of the urban area, heavily urbanized Northeas ...
but are generally uncommon.


References

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External links


Understanding flip taxes
Real estate terminology Residential real estate Housing cooperatives in the United States