Home Buying in Gramercy Park>Question Details

Cummingskl, Home Seller in Brooklyn, NY

In regards to a flip tax, is there a usual percentage amount . My co-op is imposing a 50% flip tax. I am all for the fee, but is this fee excessive?

Asked by Cummingskl, Brooklyn, NY Thu Jan 9, 2014

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In my opinion it is excessive however there are always variables so I would need more building data. It's relative to the apartment's value, price paid, sales price, monthly maintenance and what services and value the coop offers shareholders and at what price.

I would need to know the ulterior motive of the board or board member for attempting to impose such a "flip tax" for the housing corporation to share the shareholder's equity.

How much did it cost to live there? How much of the shareholder's equity is the coop responsible for? There should be a formula. Do they allow capital improvement deduction?, do they encourage renovations? Do they want to keep prices low and affordable? Do they want to discourage sales? Flippers?.

I would want to find out if any lender would loan in a coop with such a restrictive covenant as a 50% flip tax.

http://nycblogestate.com/2013/05/flip-tax.html

Mitchell Hall
Lic Assoc RE Broker
The Corcoran Group
mhall@corcoran.com
google.com/+MitchellHall
Web Reference: http://nycblogestate.com
2 votes Thank Flag Link Thu Jan 9, 2014
I can answer that question for you Mitchell.....NO, most lenders cap out at 5% because Fannie Mae will not warrant a building with a flip tax higher than the 5% because of the restrictive covenants regarding foreclosure and the variations of board liability in such an event.

Shawn Carson
"New York City's Mortgage Banker"
Senior Loan Officer
Quontic Bank
31-05 Broadway
Astoria, NY 11106
scarson@quonticbank.com
(718)215-4069 Office
(718)218-4382 Mobile
Flag Fri Jan 10, 2014
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Maybe they meant 5%? This would be the very 1st time I ever hear of a 50% flip tax.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
1 vote Thank Flag Link Thu Jan 9, 2014
I senior and I live in a Rent stabilized building. According to DHCR, the building is listed as a HDFC and in DAMP program. We are not a co-op. We have only 8 apartments in this dwelling and we don't have a tenant's association. What is going on with this dwelling and what is the landlord trying to do?
Flag Mon Oct 13, 2014
Without much information, yes the 50% flip tax is excessive; unfortunately each co-op is different, therefore there really are no set standards with respect to flip taxes....
1 vote Thank Flag Link Thu Jan 9, 2014
A 50% flip tax is indeed excessive. My question is, is this percentage based on the amount of profit from the sale or is it 50% of the sale price. The later is highly constrictive and would stop most from selling. Why would the shareholders agree to such a fee? There may be more here than meets the eye and has not been said. Can you elaborate?
1 vote Thank Flag Link Thu Jan 9, 2014
Unfortunately they can charge whatever they want, 50% is excessive.

Chris
0 votes Thank Flag Link Sat Jan 11, 2014
Each coop can impose whatever flip tax they want. You should have been aware of this when you purchased the unit. A 50% flip tax on the sale amount of the unit is unreasonable but a 50% flip tax on the realized profit is excessive but..... Speak to the board to clarify.
0 votes Thank Flag Link Fri Jan 10, 2014
There is no usual percentage flip tax as all co-ops are different. I have seen a wide range of percentages with the highest imposed by income restricted or HDFC buildings. If this is an existing co-op that is increasing the flip tax then I would have to say this is unusual and may be an indication that the building is currently running a deficit. If I can be of further assistance please don't hesitate to reach out.
Peter Forsman
Licensed Real Estate Salesperson
Douglas Elliman
peter.forsman@elliman.com
908-510-5642
0 votes Thank Flag Link Thu Jan 9, 2014
According to most Co-op by-laws, the board has the power to impose a flip tax. In few cases, a simple majority or 2/3 majority shareholders consent is needed. However, 50% of the selling price is basically a "freeze" on resale and may not survive a legal challenge. If it is 50% of net profit, still high but the board can probably get away with it.
0 votes Thank Flag Link Thu Jan 9, 2014
50 or 5%?

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes Thank Flag Link Thu Jan 9, 2014
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