Selling a co-op or condo in Queens? One of the biggest line items you might face at closing is a flip tax, and it can change your net proceeds more than you expect. It is not a government tax. It is a building fee that depends on your specific co-op or condo. In this guide, you’ll learn what a flip tax is, how it is calculated, who usually pays it, and how to plan your list price and net proceeds with confidence. Let’s dive in.
Flip tax basics
A flip tax is a charge imposed by your co-op corporation or, less commonly, your condo association when you resell or transfer your unit. The purpose is to fund reserves, offset building expenses tied to turnover, or discourage short-term speculation. It is enforceable only if your building’s governing documents authorize it.
A flip tax is different from state and city transfer taxes, title and attorney fees, mortgage recording tax, and brokerage commissions. Those are separate costs paid to government entities or private parties. You need to plan for the building flip tax in addition to statutory transfer taxes and other closing costs.
Common structures and examples
Flip taxes in Queens buildings often follow one of these structures:
- Percentage of sale price
- Example: Sale price $600,000 with a 2 percent flip tax equals $12,000.
- Flat dollar fee
- Example: A set fee of $5,000, regardless of sale price.
- Months of maintenance/common charges
- Example: Monthly maintenance of $900 with a 6-month flip tax equals $5,400.
- Per-share calculation (co-ops)
- Example: 800 proprietary shares at $2.50 per share equals $2,000.
- Sliding scale by holding period
- Example: 4 percent if you resell within 2 years, 2 percent thereafter.
The structure matters. A percentage fee grows with price, while a flat fee or per-share method may have a different impact on your net. Always confirm the formula in writing before you price your home.
Who pays and how to negotiate
In many NYC co-ops, the seller typically pays the flip tax. That said, your building’s documents or board policies may assign payment to the buyer, allow it to be split, or permit waivers in limited situations. Condos use flip taxes less often, but when they do, the payor is usually specified in the declaration or bylaws.
In practice, the cost can be negotiated. If buyers must pay the flip tax, they often lower their offer by a similar amount. Your listing strategy should make the payor clear in marketing and contract language. Always confirm in writing who pays and how the fee is calculated.
Find your building’s policy
Start with your building’s governing documents and management team:
- For co-ops
- Proprietary lease and bylaws are the primary sources for flip tax authority and calculation.
- Check the share ledger or maintenance schedule if the fee is per-share or months-of-maintenance.
- The conversion offering plan may include flip tax language for older conversions.
- For condos
- Review the condominium declaration and bylaws, and the offering plan if applicable.
What to confirm:
- Trigger: sale, assignment, or only certain transfers.
- Who pays: seller, buyer, or split.
- Calculation method, timing, and any sliding scales.
- Whether the board can waive or change the fee.
- Where the proceeds go, such as the reserve fund.
Your management company or board secretary can provide current policy details. Your attorney should review documents and confirm the exact math before you sign a contract.
Pricing and net proceeds strategy
You have two common approaches when listing:
- Price at market value and pay the flip tax from your proceeds. This is straightforward and often aligns with buyer expectations.
- “Gross up” the list price to cover the flip tax. This may not land with buyers or appraisers if comps do not support the higher number.
Agents should adjust comparable sales for flip taxes when doing pricing analysis. For example, if a comparable sold for $600,000 and the seller paid a $12,000 flip tax, you might treat the effective net as $588,000 for comparison purposes. High or unpredictable flip taxes can dampen demand or prompt buyers to seek concessions, so plan your pricing and negotiation approach with that in mind.
Net proceeds basics:
- Simplified formula: Sale price − commissions − flip tax (if seller pays) − transfer taxes and other closing costs − mortgage payoff ± adjustments.
- Flip taxes are often collected at closing, so include them in your net sheet from day one.
Sample illustration:
- Sale price: $700,000
- Brokerage (6 percent): $42,000
- Flip tax (2 percent, seller pays): $14,000
- Plus state and city transfer taxes and fees
- Approximate net before mortgage payoff and taxes: $700,000 − $42,000 − $14,000 − other fees
Seller checklist: 6–12 month plan
Use this to get ahead of the flip tax early in your process:
- Obtain and review your proprietary lease/bylaws or condo declaration for flip tax terms.
- Get written confirmation from management about the current policy, payor, and calculation method.
- Ask your agent to adjust comps for flip taxes when setting list price.
- Build multiple net-proceeds scenarios for different payor arrangements.
- Confirm whether the flip tax is collected at closing and how it appears in your contract and board package.
- Budget for the flip tax in your net sheet. Do not assume a waiver.
- Consult your attorney about any potential for a waiver in special cases, such as intra-family transfers or hardship if permitted by documents.
Queens-specific considerations
Co-ops are common across many Queens neighborhoods, especially in older buildings and conversions. That means flip taxes are more likely to appear in co-ops than in condos. Buyers in Queens also weigh multiple costs, including state and city transfer taxes, so an added flip tax can affect how your home compares to nearby options.
Board approval timelines can lengthen co-op sales. Plan for the flip tax logistics in your board package and closing calendar. For pricing, document whether comps included seller-paid flip taxes so your analysis stays apples to apples.
Quick examples you can use
Here are simple scenarios to sanity-check your plan:
- Percentage model: $600,000 sale with a 2 percent flip tax equals $12,000. If you are the payor, expect buyers to judge offers with that cost in mind.
- Months-of-maintenance model: $900 monthly maintenance with a 6-month flip tax equals $5,400. Confirm whether the calculation uses base maintenance or includes assessments.
- Per-share model: 800 shares at $2.50 equals $2,000. Ask your manager to verify your exact share count.
- Sliding-scale model: 4 percent within 2 years and 2 percent after. If you are inside the higher bracket, adjust your net sheet and timing expectations.
Next steps
A flip tax does not have to derail your plans. When you verify the policy early, price with the right comps, and set clear expectations about who pays, you protect your net and keep your sale on track. If you are six to twelve months out, this is the perfect time to align your documents, pricing strategy, and board process.
For a tailored plan that factors in your building’s exact rules and your goals, schedule your personalized market consultation with Nadine Nassar.
FAQs
Can a Queens co-op board change the flip tax?
- Not unless the governing documents grant that authority; otherwise changes generally require the amendment procedures in those documents.
Can a flip tax be waived for my sale?
- Yes, if your documents or board policies allow discretion. Always obtain any waiver in writing.
Who usually pays the flip tax in Queens?
- In many NYC co-ops the seller pays, but buildings vary. Some assign the fee to the buyer, split it, or allow case-by-case decisions.
Does a flip tax affect my appraisal or mortgage?
- It typically reduces seller net but does not directly affect buyer loan qualification. Large or unusual fees may be reviewed by a lender if they affect deal structure.
How is a flip tax collected at closing?
- It is often collected at closing by the management company per the governing documents, though timing and process should be confirmed in writing.
How do I find my building’s flip tax rule?
- Review your proprietary lease and bylaws for co-ops or the declaration and bylaws for condos, and confirm with building management and your attorney.
