A “flip tax” or “transfer tax” is not actually a tax, but a transfer fee paid upon the sale of an apartment. It is most often paid by the seller, but is sometimes paid by the buyer or shared between both parties, usually pursuant to negotiation. The sales contract will always specify which party pays this expense, and it’s always paid at closing when the title is transferred. The purpose of this fee is to generate revenue for the building, without a special assessment or increasing carrying charges.

Flip taxes run the gamut in cost. Some co-ops charge a modest flat fee of $500 or more per transaction, while some charge a certain number of dollars per share allocated to the apartment being sold. Others charge a percentage of the gross sale price, perhaps 1-3% or as much as 15-20%. Other buildings charge a flip tax that is a certain percentage of the seller’s profit, with various expenses allowed as deductions.

When buying a home, your lawyer will do pre-contract due diligence that will include the details of all closing costs.