Home Buying in New York>Question Details

Angie Manning, Home Seller in New York, NY

What is the difference between transfer tax and flip tax when you're selling a co-op in nyc?

Asked by Angie Manning, New York, NY Sat Nov 24, 2012

A few brokers have come over to speak to me about listing my apartment but I'm getting mixed messages. My board charges $2500 when I sell and they call it flip tax and I am responsible to pay it not the buyer. I've had some brokers tell me that flip tax is the same as transfer tax but I don't believe that to be the case. It's my understanding that transfer tax is a NYC or NYS tax. I came here to see if I could get an unbiased, intelligent and accurate response from some professionals on here. Thank you.

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Hi Angie,

How are you? I hope you enjoyed your Thanksgiving. Filippa has provided you with the most comprehensive & accurate response so the only thing I'll add is that If the property is $1 million or more then an additional tax ("mansion tax") equal to 1% of the sale price is also assessed. The additional 1% is paid by the buyer. Since you didn't state how much you're selling for, not sure if that's relevant or not. I wish you the best for a successful transaction.

Here’s the official site where you’ll get more info re: the NYS tax http://www.tax.ny.gov/bus/transfer/rptidx.htm
Here’s the official site where you’ll get more info re: the NYC tax http://www.nyc.gov/html/dof/html/business/business_rec_rptt.shtml

Looking forward,

Christine Gordon
Licensed Real Estate Salesperson
Cell: 917.881.2924
Fax: 347.328.9352
Apartment updates available at http://www.christinegordon.postlets.com
"Home is where the heart is."
5 votes Thank Flag Link Sun Nov 25, 2012
Hi Angie,

A flip tax is a private transfer fee that many new york coops impose on shareholders. In the late seventies and early 80's when many rental buildings converted, huge profits were being made by former renters who bought their units at inside prices and then resold them. Called "flipping" The boards decided to impose the private transfer fee and call it a "flip tax" on sellers to dissuade flipping.

Today many buildings need to build their reserve fund and finances so they have imposed flip taxes. In order for the flip tax to pass 2/3 of the shareholders have to vote in favor of it. A "flip tax"or private transfer fee is considered a restrictive covenant by lenders.

http://nycblogestate.com/2006/09/flip-tax-manhattan-coops-an…

http://nycblogestate.com/2011/02/rebny-succeeds-in-flip-tax-…

Transfer taxes are imposed by NYC and NY state. They are government imposed taxes.
New York City Transfer Tax 1% of price up to $500,000,
plus $25.00 recording fee, and 1.425% of price over $500,000.
New York State Transfer Tax $2.00 per $500.00 of sales price

New York state also has a mortgage recording tax that buyers with a mortgage pay (1.75%) and a mansion tax that buyers of properties above $1 million pay (1% of sale price)

I currently have several coop listings with "flip Taxes" (private transfer fees) An experienced listing broker should certainly know the difference between government taxes and private transfer fees called "flip tax."

http://corcoran.com/mhall

Best,

Mitchell
_________________
Mitchell Hall
Lic. Assoc. R.E. Broker
Corcoran
office 212.877.6268
fax: 212.230.4244
iPhone: 917.312.0924
MHALL@Corcoran.com
5 votes Thank Flag Link Tue Nov 27, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Angie,
It is true that a flip tax is a fee a seller of a co-op pays to the board when they sell. It can be a flat fee, a percentage of your profit, a percentage of the sale price, or a fee per share. It is to help "beef up" the reserve fund.
Transfer taxes are NYC and NYS taxes when the property is transferred. On a resale the seller pays it. Usually in a new development, the first buyer of a unit pays it. This is applicable to both co-ops and condos. The rates are: 1% up to $500,000 and 1.425% over $500,000 for NYC. For NYS the rate is $4 per $1,000 of price.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
212 381-4268
http://jenetlevy.halstead.com
3 votes Thank Flag Link Mon Nov 26, 2012
Transfer taxes are government imposed fees on the sale of real estate almost always paid by the seller. New York State has a transfer tax of $2 per every $500 or part thereof of the contract price. New York City has a transfer tax of 1% on residential sales of $500,000 or less and 1.425% of residential sales of more than $500,00. For commercial properties, the rates are 1.425% and 2.625%.

Flip taxes are imposed by coops on the transfer of shares. In most cases, the flip tax is payable by the seller, but there are numerous instances where it is imposed on the buyer. How much a flip tax is varies from building to building

Michael Richman
Licensed Real Estate Associate Broker
Bellmarc Realty.
681 Lexington Avenue
New York, NY 10022
Phone 212-688-8530 x223 Cell 917-991-2528 Fax 212-758-7495
Email mrichman@bellmarc.com
2 votes Thank Flag Link Tue Nov 27, 2012
Hi Angie. You've had your question answered. I just wanted to add my two cents based on what you've mentioned about some brokers you've spoken with.

Any broker/agent telling anyone that a Flip tax and Transfer taxes are the same should be ran away from and shunned. This is not a Real Estate Professional. It is a newbie or a jaded licensee who either needs to get their thing together or just leave the profession. There is no excuse for not knowing the difference. We are the Professionals and ignorance is no excuse. They didn't know? They're supposed to know full stop.
2 votes Thank Flag Link Mon Nov 26, 2012
Flip tax is a fee generally paid by the seller at closing; it is not a tax--but is considered as a way for a co-op to raise money instead of raising maintenance. Transfer tax is imposed by the state, county, municipality, when passing a property title to another....
2 votes Thank Flag Link Sun Nov 25, 2012
Hi Angie,

You are correct: Flip Tax and Transfer Tax is not the same thing.

The individual co-op building's Flip tax (most commonly paid by by the seller) to the building's reserve fund (condo Flip Taxes are extremely rare). This "tax" is different from the New York City RPTT (Real Property Transfer Tax), paid by the seller, as well as the New York State Transfer Tax, also paid by the seller.

You should really always talk to your accountant and your real estate attorney about any specific questions you have regarding taxes, but below is the general guide lines:

For the RPTT if the sales price of the unit is $500,000 or less, the rate is 1% of the sales price, and if the sales price is more than $500,000 the rate is 1.425%.

The New York State Transfer Tax is computed at a rate of two dollars for each $500 (0.4 %) of the sales price. These taxes are customarily paid by the seller, unless it is a sponsor sales in a new construction, in which case this tax duty is commonly passed along to the buyer.

Best of luck with the sale of your apartment. Below is a link to Town's Sellers Guide. That will give you even more detailed information on what it will cost you to sell.

Best,
Filippa Edberg-Manuel
Filippa@townrealestate.com
2 votes Thank Flag Link Sat Nov 24, 2012
A transfer tax and a flip tax are different. A flip tax is payed to a co-op board when you sell. A transfer tax is a NYS tax on real property and is $4 per $1,000 of the purchase price.
1 vote Thank Flag Link Sun Nov 25, 2012
Hello Angie. A Flip tax is a "fee" imposed by the Co-Op board (another way for the board to make money). A Transfer tax is a "tax" imposed by a governmental agency/municipality. The NY transfer tax rate is $500 for every $2. That means if you sell your co-op for $1M your Transfer tax would be $4,000. This is seperate from your Co-op boards Flip Tax. You should contact your Co-op board for the exact amount or percent of the Flip Tax.

See below a link for additional information concerning NY Transfer tax.

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.


Wishing you all the best,

De Vonte Williamson , LSA
Proudly Serving Long Island
Coldwell Banker Residential
(631)384-3695
http://cbmoves.com/DeVonte.Williamson
http://devontesellsny.wordpress.com/
DeVonte.Williamson@cbmoves.com
"I Stand Behind Getting You Results!
1 vote Thank Flag Link Sun Nov 25, 2012
You're correct - a Transfer Tax is paid to NYS & NYC - The Flip Tax is paid is paid by the Seller back to the Building and a percentage to the City.
1 vote Thank Flag Link Sun Nov 25, 2012
Hi, The flip tax is something that is imposed by the board when an owner sells a unit. They do it to deter flipping of units, hence the name flip tax. The NY State transfer tax is $4 per every thousand of the sale price. There is also a separate NYC transfer tax that your agent can advise you on.


Chris

Chris
1 vote Thank Flag Link Sat Nov 24, 2012
Transfer Tax is a Taxes paid by the Seller to Federal / NY State and NYC equal to 1.425% per transaction.
Flip Tax is a Co-op Board charges from Sellers, as share holder, his/her is selling apartment unit . Some Co-op, when own the Land, they do not have a Proprietary Lease and no Flip Tax.
0 votes Thank Flag Link Mon Nov 17, 2014
Co-op owners maybe required to pay a flip tax upon the sale or transfer of their shares. The tax , which may equal 1% to 5% of the purchase price, is not paid to the city or state, but to the cooperative corporation.

Then there is New York City Transfer tax= 1 % of sale price up to $ 500,000 or 1.425% of sale price if $ 500,000 and over, plus $ 25 administrative fee
and New York State Transfer Tax- $ 4 per $ 1000 of sale price

So, the answer is,: you have your flip tax , your NY State transfer tax and your NY City Transfer tax

If you need any assistance olease contact me at mcortazzo@crrnyc.com
0 votes Thank Flag Link Sat Dec 29, 2012
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