Selling an Upper East Side co-op? The building’s “flip tax” can shift your bottom line by tens of thousands of dollars. You want clarity before you set a price, accept an offer, or plan your next purchase. In this guide, you’ll learn what a flip tax is, how it’s calculated, who typically pays, and how it affects your net proceeds, with clear examples and steps to confirm your building’s policy. Let’s dive in.
What a co-op flip tax is
A flip tax is a fee your co-op corporation charges when shares are transferred at closing. It is paid to the building, not to the city or state. It is not a government tax.
The flip tax comes from your co-op’s governing documents. You will see it in the offering plan, proprietary lease, by-laws, or board resolutions. Co-ops often use flip tax revenue to support operations, build reserves, or discourage short-term resales.
On the Upper East Side, many co-ops have a flip tax. Policies vary widely by building, so you should confirm the exact formula before you price or negotiate.
Common flip tax structures
The wording in your building’s documents controls the math and who pays. Here are the most common setups.
Per-share fee
- How it works: A dollar amount per co-op share assigned to the apartment.
- Example: 1,200 shares at $25 per share equals a $30,000 flip tax.
- Why buildings use it: Simple and predictable. It scales with apartment size as reflected by shares.
Percentage of sale price
- How it works: A set percentage of the gross sale price. Market commentary often cites 1 to 3 percent, but your building controls the exact number.
- Example: $1,500,000 sale at 2 percent equals $30,000.
Percentage of profit or net proceeds
- How it works: A percentage of your profit or a percentage of your net after certain costs. The documents define the formula.
- Notes: This approach targets speculative gains and usually requires more documentation from the seller.
Flat fee
- How it works: A fixed dollar amount for any transfer, such as $10,000.
- Benefit: Very easy to plan around.
Hybrid or conditional structures
- Examples: Different formulas for different transfer types, higher fees for resales within a certain time, or exemptions for intra-family transfers. Some buildings include caps or board discretion to waive all or part of the fee.
Who pays on the Upper East Side
Many co-ops expect the seller to pay the flip tax. That is the common default, but it is not universal. Because boards approve buyers and transfers, your building’s documents and past practice matter.
Payment is often negotiated in the contract. You may see these outcomes:
- Seller pays the full flip tax. This is most common.
- Buyer pays the flip tax or agrees to split it as part of a competitive offer.
- Board waives or reduces the flip tax for certain transfer types if documents allow it.
If you want a buyer to cover some or all of the flip tax, signal it early in negotiations and align with your managing agent and attorney so everything matches building policy.
How flip tax changes your net proceeds
To see the impact, compare these simple scenarios on a $1,500,000 sale. Assumptions: a 5 percent broker commission and only the flip tax as the variable. Other closing costs are not included here.
- Scenario A — Per-share: 1,200 shares at $25 equals $30,000. Net before other costs equals $1,500,000 minus $75,000 minus $30,000 equals $1,395,000.
- Scenario B — 2 percent of sale price: 2 percent of $1,500,000 equals $30,000. Net equals $1,395,000.
- Scenario C — Flat fee: $15,000 flat. Net equals $1,410,000.
- Scenario D — 20 percent of profit: If you bought at $900,000, profit is $600,000. Flip tax equals $120,000. Net equals $1,305,000.
Key takeaway for sellers: A profit-based flip tax can lower your net more than a per-share, flat, or sale-price percentage. Price strategy should reflect your building’s formula and who pays.
How to confirm your building’s policy
You do not have to guess. You can confirm the exact formula and current practice using your co-op’s documents and management.
- Start with the offering plan. Search for “flip tax,” “transfer fee,” “stock transfer fee,” or “proprietary lease - transfer.” Offering plans for conversion buildings are filed with the New York State Attorney General’s Real Estate Finance Bureau. You can learn how to access records through the bureau’s site at the New York State Attorney General’s Real Estate Finance Bureau.
- Review the proprietary lease and by-laws. These outline the fee, calculation, who pays by default, any caps, and whether the board can waive or reduce the fee.
- Ask management. The managing agent can confirm the current policy and the calculation used in recent closings.
- Request board or attorney guidance. Ask for a written calculation example for your unit and transfer type before you sign a contract.
- Check the purchaser board package. It often lists transfer fees and timing so you can align expectations with buyers.
- Engage a co-op attorney early. A Manhattan co-op attorney will read the documents, confirm any exemptions, and advise on negotiating with the board.
Key phrases to search in documents:
- “Transfer fee,” “transfer charge,” “stock transfer fee,” “flip tax,” “per share,” “percentage of sale price,” “percentage of profit,” “exemptions,” “board discretion.”
For background on offering plans and oversight of co-op conversions, see the New York State Attorney General’s Real Estate Finance Bureau.
Pricing and negotiation tips for sellers
- Quantify the flip tax early. Run your estimated net with your agent and attorney before you set an asking price.
- Decide who pays. If you want the buyer to cover or split the fee, position it in the listing strategy and contract. Market conditions will influence what is feasible.
- Adjust your pricing. If the flip tax is material, consider a price that accounts for it while staying competitive with similar units and building policies nearby.
- Coordinate with management. Confirm the fee amount and payee instructions so your closing statement matches the board’s process.
Work with a data-minded advocate
Flip taxes are building-specific and can be complex. You deserve a clear, numbers-first view of your net and a strategy that aligns with Upper East Side co-op norms. With a finance background and a concierge approach, I help you model scenarios, position the listing, and negotiate who pays the flip tax, all while managing board expectations and timing. If you prefer, podemos hablar en español.
Ready to see where you stand? Get your instant home valuation and a tailored plan to maximize your net with Julio Izquierdo.
FAQs
What is a co-op flip tax and why do Upper East Side buildings use it?
- A flip tax is a fee paid to the co-op at transfer that supports building finances or discourages short-term resales. It is not a government tax and is set in your co-op documents.
How is a flip tax calculated in Manhattan co-ops?
- Common methods include per-share, a percentage of sale price, a percentage of profit or net proceeds, a flat fee, or hybrids with caps or exemptions. Your building’s documents control the exact math.
Who typically pays the flip tax in Upper East Side sales?
- Many buildings expect the seller to pay, but payment can be negotiated. Buyers sometimes agree to pay or split the fee to strengthen an offer, subject to building rules.
Where can I find my building’s flip tax policy and current practice?
- Check the offering plan, proprietary lease, by-laws, and any board resolutions. Ask your managing agent for recent-closing calculations and have your attorney confirm details.
Will the flip tax appear on the closing statement for my co-op sale?
- Yes. The flip tax is collected at closing and listed by the co-op’s attorney or managing agent per the board’s procedure.
Can a co-op board waive or reduce the flip tax for my transfer?
- In some buildings the board has discretion to waive or reduce the fee. In others it is mandatory. Your documents and management will clarify the policy.
Is a flip tax deductible on my taxes when I sell?
- Tax treatment can vary. Speak with a CPA. In some cases transfer fees are considered selling expenses for basis calculations, but you should get personalized advice.
