Price discount for Flip Tax

i would discount at least the amount of the flip tax on current market value of no flip tax. calculating on profit becomes very difficult. you can renovate for $500K and sell at break even (actually losing closing costs and broker commission) and have to pay a flip tax anyway.

$1M zero flip tax = $1M
$1M with 2% flip tax = $980K
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All else being equal, ab_11218's approach makes some sense, but there are a few complications. Most important, a flip tax often enables a coop to have slightly lower maintenance than would otherwise be necessary. If your anticipated hold period is long, you might prefer a flip tax to higher maintenance.

Also keep in mind that a seller-paid flip tax is, from the buyer's point of view, a FUTURE expense. The correct present-valuation of those future dollars can be a little tricky.

Good points. How about 2% on price vs 5% on profits? Are these about equal or where is the break even percent of profit to 2% price flip tax?

5% profit is much much much better than 2% price. You need a 2/3 price appreciation for the two to be equal. And if you're up that much, are you really going to care about a small extra flip tax?

In general, your breakeven appreciation is (price flip tax)/(profit flip tax - price flip tax).Even with 10% profit tax your breakeven is 25% vs a 2% price tax. Plus the profit tax is worse precisely when you can most afford it.

flip tax is a significant consideration. many coops don't have these anymore so consider carefully before buying into a building that uses one to generate income.

Simple answer is seller pays flip tax.
Seller needs to make a deal that covers the costs of transaction. The flip tax is an agreement between shareholders not an agreement between shareholders and prespective buyers. In a super hot market where buyers are elbowing each other in the eyeballs to get to your property it's a sellers luxury to dump it on the buyer. Today, not so much. I would start the negotiation with that reality in mind.
Coops love flip tax. It helps all those shareholders you leave behind as well as the new shareholders.

Must disagree withgottabrain. Trend is actually the other way. Am willing to reconsider if you can explain what you base this on. I am aware of no coops abolishing a flip tax. All I see are coops coming to see the benefits/necessity of them. As for how to factor them in, if the fee is in the mainstream range, I don't hunk it figures in at all. I don't hunk there's any evidence that it has any impact on sales prices in well run reasonably sized coops.

if you are planning to live in a coop for a at least 10 years, flip tax may work in your favor if there are a lot of other sales in the building which usually go towards improvements you would pay for otherwise in form of increased maintenance.

>Must disagree withgottabrain.

Hmm, I think you just fell for his joke.

>I don't hunk it figures in at all. I don't hunk there's any evidence

Hmmm, what else is on your mind?

Lol. Love iPad typing and spell correct.