Flip tax
A flip tax is a transfer fee paid to the building when an apartment changes hands — typically calculated as a percentage of sale price, a flat amount per share, or a percentage of profit. Common in co-ops; rare in condos, where it requires explicit authority in the declaration.
Frequently asked questions
Who pays the flip tax — buyer or seller?
Set by the bylaws or board resolution implementing the fee. Seller-paid is most common in NYC co-ops; buyer-paid exists but is unusual. Some buildings split it. Whichever party is named, both sides see it in the contract and price around it.
Can a board add a flip tax by resolution?
Not unilaterally. Co-ops require a bylaw amendment with the supermajority specified in the cert of incorporation. Condos require a declaration amendment, which is even harder to pass. Boards that try to add via house rules or board resolution face a known and losing legal challenge.
Does the flip tax apply to inheritance or gift transfers?
Usually not — most flip tax provisions carve out transfers to spouses, children, or estates. Read the specific bylaw language. Trust transfers are a frequent edge case and usually fall outside the carve-out unless explicitly included.
Is the flip tax deductible for the seller?
Yes, for federal income tax — it's a selling expense that reduces capital gain, like a broker's commission. State treatment generally follows. The buyer-paid version is added to cost basis. CPA confirmation is wise on any meaningful transaction.