Flip Tax

i see flip tax as a headache. would much rather see the budget come from maintenance.

there were many coops that lived off of flip tax during the bubble run and now have to adjust the maintenance significantly or do assessments.

once flip tax is added, most coops give the board a right to adjust it without a vote of majority or super-majority. for me, that is a huge risk. all you need is to get some idiots on the board and your apartment's price drops because they feel that 5% flip tax is fine, or 10%, etc.

We've been trying unsuccessfully for years to enact a flip tax.

It's original intention was good: to deter people from buying and "flipping" apartments, which was problematic for many owner/tenants during the insane boom years.

Those days are gone -- perhaps forever. Now it's only real advantage is a fundraiser for the building. But how many sales in a given building are there, really, to offset the annoyance factor for both parties at closing? I'm not going as far as calling it a "deterrent" -- let's face it, for a half-million dollar apartment, $10K isn't going to break the bank for anyone -- and it can always be negotiated down by knocking $10K off the price anyway.

I view a % of profits flip tax as much more fair and less of a deterrent than a % of sale flip tax. OK to share the wealth if I'm making a lot on my resale, but really hurts to take a loss but still enrich the coop

Who says YOU would be "enriching" the co-op?

Have the buyer pay the flip tax.

Also ... correct me if I'm wrong ... but aren't the provisions of the "flip tax" in most buildings written in such a way that the flip tax isn't triggered unless the unit has been sold in less than X amount of time from its previous sale?

Flip tax can be quite helpful to smaller coops to contend with local law 11 requirements (every 5 years requirement to inspect and fix exterior brick/facade) as it can be quite expensive.

We currently have a flip tax only for those who sell within five years of purchase - $2,000 or 3% of the profit, whichever is greater. Despite the very modest amount, we've had a couple of closings that took place five years and a few days later. :)

I like this approach because it's a true flip tax designed to promote "profit sharing" among those who use our building as an investment (discouraged) v. a long-term residence and reimburse the building for the excess wear-and-tear that frequent moves can cause.

On the other hand, in 10 years, I think one unit has paid the tax, and total revenue was something like less than $6,000.

The other big drawback is that "profit" is calculated by sale price - purchase price with no allowance for renovations, so investment in making your apartment (and thus the building) nicer is penalized.

We go back and forth about whether to implement a flip tax on everyone, with more favoring it when our reserves are low. If we address it, I think at minimum we'll need to revisit the definition of "profit" or whether we should tax on profit at all.

"Flip tax can be quite helpful to smaller coops to contend with local law 11 requirements (every 5 years requirement to inspect and fix exterior brick/facade) as it can be quite expensive."

So can sending the super around every second Tuesday of the month to beat the shit out of every tenant for $500 in cash.

That doesn't make it right.

Dude, your a partner in a corporation that owns a building. If you don't like it,find another corporation or buy a condo :)

99% of flip taxes do not take into consideration the time you've been there and/or the profit being made. this is the reason why i'm against them.

for having it pay for local law 11, that is the exact reason why, financially, i disagree as well. you can't count on it. raise the maintenance or do an assessment.

"99% of flip taxes do not take into consideration the time you've been there and/or the profit being made. this is the reason why i'm against them."

Good point.

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"for having it pay for local law 11, that is the exact reason why, financially, i disagree as well. you can't count on it. raise the maintenance or do an assessment."

Even better point. What happens when it comes time to have the brickwork redone and NO ONE has moved, thus triggering a flip tax?

>Even better point. What happens when it comes time to have the brickwork redone and NO ONE has moved, thus triggering a flip tax?

Then obviously you need an assessment. It doesnt have to be all or nothing or rather all the time or none of the time. Im actually not crazy about the flip tax. But I can see some of the argument for it.

And for the record, a)my coop's flip tax is 3% which is excessive.
b) my building is up for local law 11 next year which in essence my purchase is funding it. (Though the seller paid for it, it was obviously factored in negotiations)

Matt - confused how you can argue that you think "the provisions of the "flip tax" in most buildings written in such a way that the flip tax isn't triggered unless the unit has been sold in less than X amount of time from its previous sale" and then say Good Point when ab accurately tells you you are incorrect?

My co-op has had a 2% transfer fee for several years. Before that it was x$-per-share.

The money has to come from somewhere, and the vote was that it'd be less painful to grab it when people are writing big checks rather than in dribs and drabs from maintenance or assessments.

Not that it matters all that much. For 2011 the flip tax will save me $1162, with a 2007-2011 total of $7230. No big deal, but better coming from buyers and sellers than me.

Freebird
Matt is wrong about provisions for a time window of purchase to sale but he is agreeing with Ab's feelings on why Ab's against the flip tax.

Im more confused on the other bipolar posts. Matt you seem dead set against flip taxes but you wrote, "We've been trying unsuccessfully for years to enact a flip tax." Do you mean the rest of your board by "We?"

sellers pay flip tax
2% is an excellent idea
coop is a collective which takes money to run
the transfer of property should enrich the coop on some small scale to help with the never ending updating that every building needs.
You sell, so hopefully you profit, you share the profit.
You sell, no profit, 2% hurts...cost of doing business.
Also, move in move out fees

"Matt is wrong about provisions for a time window of purchase to sale"

Not true. Many buildings do, in fact, have these provisions in place.

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"Matt you seem dead set against flip taxes but you wrote, "We've been trying unsuccessfully for years to enact a flip tax." Do you mean the rest of your board by "We?"""

Yes, I mean the rest of the board. I was in support only of a TRUE "flip tax" where the property was, in fact, being "flipped" -- sold within 24 months of purchase.

On the "moral"(for lack of a better word) argument of it I kind of agree with you but you know if you plan on staying where you for some time, it's beneficial specifically to you to have no window.
And flipping means someones making money means your apartment value is going up. Some positives.

"flipping means someones making money means your apartment value is going up."

Good for them.

But if I wanted to live amongst a bunch of here-today-gone-tomorrow gypsies I'd still be a renter.

What kind of gypsies do you live with?