NYC Real Estate Lawyer Natalia Sishodia Explains the Purpose of a Flip Tax in New York
June 14, 2022 at 16:28
NYC real estate lawyer Natalia Sishodia releases a new article (https://sishodia.com/what-is-a-flip-tax/) explaining the purpose of a Flip Tax in New York. The lawyer explains that there has been a considerable shift from rental units to co-ops over the past 80 years. Recently, almost 75% of housing in NYC is co-op housing.
“Cooperative housing, or co-ops, are corporations that own a building where the residents are shareholders of that corporation. Sales of units are not real property sales but transfers of shares of ownership in the building. The NYC co-op flip tax is a tax or transfer fee charged by a co-op association whenever a unit is transferred. This fee can be paid by a seller or a buyer, depending on the terms of the contract,” says the NYC real estate lawyer.
The lawyer explains that when buildings are converted from rental units to cooperative housing in the 80s, flip taxes became a good way to raise capital for expenses for the building without raising assessments for the unit owners. A co-op is also more invested in long-term unit ownership and is more particular about who becomes a unit owner.
Attorney Natalia Sishodia says that flip taxes can also discourage buying and flipping units for quick profits. In New York, flip taxes are determined by each individual building and usually vary significantly from building to building. Flip taxes to run between one and three percent of the unit’s sale price.
In the article, the lawyer says that the average NYC co-op flat flip tax is 1% to 3.3% of the sale price. The seller usually pays this fee. The cost of a flip tax varies from one building to the next. In some cases, a person may also find a condo with a transfer tax in New York City. In addition to the flip tax, all other closing costs for sellers include broker commissions and the NYC & NYS Transfer Taxes.
According to the real estate attorney, “As with many negotiable real estate costs, who pays for the flip tax can vary with the market at any given time. When the market is a buyers’ market, and sales are slower, the seller will most often pay the flip tax. In a hot market, a flip tax may fall on the buyer as part of the terms of the sale. Anyone buying or selling a co-op in New York City should understand who is contractually obligated to pay the flip tax in the transaction.”
Lastly, the lawyer also stresses the importance of having an experienced lawyer when negotiating the purchase or sale of real estate, or in any other real estate transaction. An experienced lawyer can help clients understand their rights and ensure they get the best deal possible.
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