Flip Taxes Explained: Who Pays and How Much

Despite the name, a flip tax is not a tax and has nothing to do with flipping. It's a private transfer fee that a co-op corporation (or occasionally a condo association) charges when a unit changes hands. The money goes to the building, not the government, and it's typically used to fund reserves without raising monthly maintenance.

Who pays it

Usually the seller. The building's governing documents specify, and the purchase contract confirms. In rare cases it's split or shifted to the buyer by negotiation or by the building's own rules — always verify in the specific building's documents, because assuming costs money.

The common formulas

1. Percentage of gross sale price (most common)

Typically 1%–3%. On a $1.5M sale at 2%, that's $30,000. Simple and predictable.

2. Per-share flat amount

E.g., $50 per share. A 500-share apartment pays $25,000. This structure can be regressive or progressive relative to price depending on how shares were allocated in the original offering.

3. Percentage of profit

A share of the gain over your purchase price — e.g., 10%–20% of profit. Less common, and it can be brutal in a long-held apartment with large appreciation.

4. Flat fee

A fixed dollar amount regardless of price. Rare and usually modest.

5. Tiered or declining by holding period

Some buildings charge more for quick resales (an actual anti-flipping mechanism) and less after several years of ownership.

Are there exemptions?

Many buildings exempt certain transfers: to a spouse, to a trust for estate planning, by inheritance, or between existing shareholders. Sponsor sales are often exempt. Read the rules — a transfer you assumed was free can trigger a five-figure charge.

Why buildings have them

Flip taxes let a co-op build reserves from people leaving rather than from people living there. Shareholders like this because it keeps monthly maintenance lower and funds capital work without an assessment. Boards can usually adopt or increase a flip tax by amending the proprietary lease, which typically requires a supermajority shareholder vote — so a building that doesn't have one today could add one later.

What it means for buyers

• Budget it as a future cost. Your all-in cost of ownership includes the flip tax you'll pay on exit. On a 2% flip tax, that's another 2% off your eventual net.

• Check whether the building can raise it. Ask your attorney to read the amendment provisions.

• Weigh it against reserves. A building with a flip tax often has healthier reserves and fewer assessments. It's a transfer of when you pay, not always an increase in total cost.

What it means for sellers

• It's part of your net sheet, not a surprise at closing. Alongside the ~6% commission, NYC transfer tax (1% under $500K / 1.425% at $500K+), NYS transfer tax (0.4%, or 0.65% on residential $3M+), and attorney fees, a 2% flip tax pushes typical co-op seller costs toward 8%–10% of the sale price.

• You cannot make the buyer pay it unless the building's rules or your negotiation say so — and buyers, who already face the mansion tax at $1M+, resist.

• Verify the exact calculation with the managing agent before you list, especially in per-share and profit-based buildings where the number isn't obvious.

Do condos have flip taxes?

Traditionally no, but they exist — some newer condos and conversions include transfer fees in their by-laws. Never assume; have your attorney check the declaration and by-laws.

This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Flip tax terms are building-specific; confirm with the managing agent and your attorney. As of August 2026.

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