Co-op Flip Tax Calculator

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Glossary

Flip Tax

A ‘Flip Tax’ is an informal term for an additional seller closing cost levied by some co-ops on sale transactions. Both the amount and formula for a Flip Tax vary by building, and it’s even possible for a condo to have a Flip Tax in NYC. A building may also amend, implement or remove a flip tax at any point by way of an owner vote. Seller closing costs in NYC are customarily higher for co-ops vs. condos because of the fact that most co-ops charge sellers a Flip Tax.

% of Sale Price

The ‘% of sale price’ format for a Flip Tax is calculated by multiplying the sale price by a predetermined percentage which varies by building. The typical range for a percentage of sale price co-op flip tax in NYC is 2% to 5%. That being said, some HDFC co-ops can have significantly higher Flip Taxes.

% of Profits

The ‘% of profits’ format for a Flip Tax is calculated by deducting the cost basis from the sale price and multiplying the result by a predetermined percentage which varies by building. Cost basis consists of the purchase price plus any qualifying capital improvements, closing costs or other factors deemed appropriate by the co-op board.

$ per Share

The ‘$ per share’ format for a Flip Tax is calculated by multiplying the number of shares assigned to an individual co-op apartment by a predetermined dollar amount per share. Since there is no relationship between the number of shares held by co-op apartments in different buildings, there is no average range for the ‘$ per share’ flip tax amount. That being said, most ‘$ per  share’ flip taxes amount to no more than a few percentage points of a sale price.

Number of Shares

Each individual co-op apartment is assigned a number of shares by the co-op corporation. Larger units as well as more desirable apartments (higher floor, better exposure, etc.) typically have a higher number of shares assigned to them. Operating costs and assessments for a co-op are proportionally allocated to units based on the share count. It’s important to note that while share count may be analyzed between units in the same co-op, there’s no way to draw any meaningful conclusions from the number of shares assigned to units in different co-op buildings.

Cost Basis

Cost basis consists of the purchase price plus any qualifying capital improvements, closing costs or other factors deemed appropriate by the co-op board. Cost basis usually comes into play when a Flip Tax is based on the size of a seller’s profit as opposed to the sale price itself.

FAQ

How much is the average co-op flip tax in NYC and who pays it?

The average co-op apartment flip tax in NYC is 1% to 3% of the sale price, and it’s customarily paid by the seller. Exact flip tax amounts vary by building. A flip tax can be structured as a percentage of the sale price, a percentage of profits, a flat-fee or a per-share amount. A co-op’s flip tax is typically outlined in the proprietary lease, by-laws and/or the resale application.

Do condos in NYC have a seller flip tax?

Rarely. The vast majority of condo buildings in NYC do not charge a flip tax. Instead, some condos and all new developments charge buyers a capital contribution fee. The capital contribution fee is typically a few months’ worth of the apartment’s common charges, and it’s designed to help grow a building’s reserve fund.

How much are seller closing costs in NYC?

Seller closing costs in NYC are between 8% to 10% of the sale price. Closing costs include a traditional 6% broker fee, combined NYC & NYS Transfer Taxes of 1.4% to 2.075%, legal fees, a building flip tax if applicable as well as building and miscellaneous fees. Save up to 6% when selling through Hauseit’s Assisted FSBO Listing Service, or consider 1% Full Service for a traditional yet lower cost sale experience.

Is it possible to reduce my seller closing costs in NYC?

Yes. You can save up to 6% when selling through Hauseit’s Assisted FSBO Listing Service, or consider 1% Full Service for a traditional yet lower cost sale experience. It’s also possible to further reduce your seller closing costs through a Purchase CEMA if you’re selling a condo or house with an existing loan balance and the purchaser is financing.

How can I save money when buying a co-op in NYC?

You can reduce your buyer closing costs and save up to 2% on your purchase by requesting a buyer agent commission rebate through Hauseit. A rebate is a legal and non-taxable way to reduce your co-op buyer closing costs while receiving traditional, full-service representation from a seasoned buyer’s agent throughout the purchase process.

Last Updated: 4/17/2020
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided. Hauseit LLC is a Licensed Real Estate Broker, licensed to do business in New York under license number 10991232340. Principal Office: 148 Lafayette Street, New York, NY 10013.
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