Home Buying in Brooklyn>Question Details

Stefanie, Home Buyer in Brooklyn, NY

Hi! I'm a 1st time buyer looking to purchase a coop in Sheepshead Bay area. What is a Flip tax and how it's going to affect property value?

Asked by Stefanie, Brooklyn, NY Wed Aug 1, 2012

Help the community by answering this question:

Answers

5
Dear Stefanie:

The flip tax on a co-op apartment is a fee that the co-op imposes on the co-op owners when they sell their co-op. It can be a flat fee, a percentage of dollar amount per share. It is a means by which the co-op raises capital in addition to the monthly maintenance fees.

Some co-ops have no flip tax which is a good indication that they are in healthy financial condition. I have personally witnessed others where the flip tax was as high as 20% of the sales price! When you have a flip tax that high it makes it hard to sell because banks will not give loans on those co-ops, it is too risky for them if they had to foreclose on the unit.

Always make sure you know the flip tax policy before you purchase a co-op. Even though the buyer does not pay this fee, it will have a dramatic effect on the value of the co-op and ease at which you can sell at a later date if you were to purchase.

If I can be of further assistance, please let me know. Good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Sun Aug 5, 2012
Good morning Stefanie,

A "Flip Tax" is a fee charged by a Cooperative when an owner of an apartment in the Co-Op sells the apartment. The Owner pays this fee to the Cooperative upon the sale of an apartment. The fee is meant to discourage Owners from coming in to a Co-Op and quickly selling for a higher price. Frankly, in my Humble Opinion, it's ridiculous and puts an onerous obstacle in the way of a real estate transactions.

Flip Taxes can be reasonable OR incredibly unreasonable. The tax is determined by a percentage of the shares owned by the apartment owner.

The Flip Tax affects a Buyer, too, even though the Owner pays it, not the Buyer. When you apply for your mortgage, we must subtract the Flip Tax from the purchase price to determine the maximum allowable loan for that apartment purchase. This is a direct affect on value.

If you have been Prequalified for a Cooperative loan (it's not really a mortgage), your Loan Officer should have explained this to you in detail at the time of Prequalification. If not, then you need to find yourself a new Lender to work with. If your L.O. left out something as important as the Flip Tax, imagine what other nasty surprises there are in store for you as you purchase your apartment!


You might also consider purchasing "The New York Co-Op Bible" as this is a valuable resource for Co-Op Buyers and Sellers and Owners.
http://www.amazon.com/The-New-York-Co-op-Bible/dp/0312340753…



Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528 http://www.phsloans.com
0 votes Thank Flag Link Thu Aug 2, 2012
Thank you ladies & gentleman's for your input
0 votes Thank Flag Link Wed Aug 1, 2012
Hi Stefanie
Great article from Luke - do read it.. additionally, you will need to cover this amount plus your
down-payment 20 - 25% an closing costs to buy said coop, as you can no longer finance them
should you have any other questions please feel free to contact me directly.
madelinepadovano@fillmore.com
718-332-8800
0 votes Thank Flag Link Wed Aug 1, 2012
Here is an article thaw ill be beneficial to you:

http://www.nytimes.com/2003/04/13/realestate/your-home-impos…
0 votes Thank Flag Link Wed Aug 1, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer