Short answer: a flip tax is a transfer fee that a NYC co-op charges when an apartment is sold. It is set by the building, not by the city or state, and is usually paid by the seller. The most common form is 1% to 3% of the sale price, but some buildings charge per share, a percentage of the seller’s profit, or a flat fee.
Despite the name, a flip tax is not a government tax and has nothing to do with how quickly an apartment is resold. It is a fee the co-op collects to build its reserves, which helps keep maintenance lower for everyone in the building. Because it can be large, sellers should confirm the exact amount before pricing an apartment, and buyers should know whether the contract shifts any of it to them.
Types of Flip Taxes
| Flip tax structure | How it works | Example on a $900,000 sale |
|---|---|---|
| Percentage of the sale price | A set percentage of the gross price, most often 1% to 3% | 2% = $18,000 |
| Per-share fee | A dollar amount for each share allocated to the apartment | 500 shares × $20 = $10,000 |
| Percentage of profit | A percentage of the seller’s gain over what they paid | 20% of a $300,000 gain = $60,000 |
| Flat fee | A fixed amount per transfer, regardless of price | $5,000 |
Examples are illustrative. Each building sets its own structure and rate.
Who Pays the Flip Tax in NYC?
By custom the seller pays, and most sale contracts say so. But the co-op’s documents control who the building collects from, and some buildings impose the fee on the buyer or split it. The parties can also negotiate who bears it: a seller in a slow market may agree to split it, while a buyer in a competitive market may accept paying it. Sponsor sales of unsold shares are often exempt under the offering plan. See our overview of who pays closing costs in New York.
Where to Find Your Building’s Flip Tax
The flip tax must be authorized in the co-op’s governing documents, typically the proprietary lease or the bylaws, and the details are often repeated in the house rules or a board resolution. New York Business Corporation Law §501(c) permits co-ops to impose transfer fees that are authorized in these documents. The managing agent can confirm the current amount and how it is calculated, and a seller’s attorney should request it in writing before the contract is signed.
Is a Flip Tax Negotiable?
The amount the building charges is not negotiable with the board in an ordinary sale. What is negotiable is who pays it between buyer and seller, and it can be factored into the price. Buildings can change or add a flip tax by amending their documents, usually by a shareholder vote, so a seller who has owned for many years should check the current terms rather than relying on what applied when they bought.
Flip Tax and Your Taxes
For a seller, a flip tax is generally treated as a cost of selling that reduces the amount realized, and therefore the taxable gain, rather than as a separately deductible tax. Confirm the treatment for your situation with a tax adviser.
Do Condos Have Flip Taxes?
Generally not in the same form. Condominium units are real property, and condo boards usually cannot impose a percentage-of-price flip tax on sellers. Many condos do charge buyers a working capital contribution, often equal to one or two months of common charges, which serves a similar reserve-building purpose. See condo vs. co-op in NYC.
Our NYC seller closing cost calculator includes an optional flip tax line for co-op sellers: turn it on and enter your building’s rate (it starts at 2%), which the managing agent can confirm.
Selling a co-op? Our NYC real estate attorneys confirm the flip tax with the managing agent, negotiate who pays it, and make sure it is calculated correctly on the closing statement.
Frequently Asked Questions
What is a flip tax in NYC?
A flip tax is a transfer fee a co-op building charges when an apartment is sold. It is set by the building’s governing documents, not by the government, and usually ranges from 1% to 3% of the sale price when charged as a percentage.
Who pays the flip tax, the buyer or the seller?
The seller usually pays by custom and under most contracts. Some buildings charge the buyer or split it, and the parties can negotiate who bears it.
How much is a typical flip tax?
Percentage-based flip taxes most often fall between 1% and 3% of the sale price. Other buildings charge a per-share amount, a percentage of the seller’s profit, or a flat fee.
Is a flip tax legal in New York?
Yes. New York Business Corporation Law §501(c) allows co-ops to impose transfer fees that are authorized in the proprietary lease or bylaws.
Do condos charge a flip tax?
Generally not. Instead, many condos charge buyers a working capital contribution, often one or two months of common charges.
Can a co-op increase its flip tax?
Yes, by amending its governing documents, typically through a shareholder vote. Sellers should confirm the current flip tax rather than relying on the terms in place when they bought.
Selling a Co-op in NYC?
Our real estate attorneys handle co-op sales from contract through closing, including flip tax and transfer requirements. Schedule a free consultation.
Contact Us Onlineor call (212) 920-5989