Thinking about selling or buying a co-op in Queens and keep hearing about a “flip tax”? You are not alone. This charge shows up at many NYC co-op closings and it can change your bottom line if you do not plan for it. The good news is that once you know how it works, you can price, negotiate, and close with confidence.
In this guide, you will learn what a flip tax is, how Queens co-ops commonly calculate it, who pays, when it is collected, and how to find the exact rules for your building. You will also see simple examples and a checklist you can use before you list or submit an offer. Let’s dive in.
What a co-op flip tax is
A flip tax is a charge a cooperative corporation imposes on the transfer of a co-op apartment. It is not a government tax. It is a contractual fee created by the co-op’s governing documents and collected by the building at closing.
Why buildings use it:
- Generate revenue for operating budgets and reserves.
- Offset turnover costs like administration, legal, and move logistics.
- Stabilize monthly charges by funding the budget without raising maintenance for everyone.
Where you find it: The requirement and formula must appear in the proprietary lease, bylaws, or house rules. For newer buildings, it also appears in the offering plan. The board enforces the charge at closing.
How Queens buildings structure flip taxes
Flip taxes vary by building. Even within Queens neighborhoods like Forest Hills, Jackson Heights, and Bayside, two similar co-ops can have very different rules. Common structures include:
- Percentage of sale price. A fixed percent of the contract price. Example: 2 percent of the sale price.
- Percentage of net profit. A percent of your gain, usually defined as sale price minus purchase price and sometimes minus approved capital improvements.
- Per-share fee. A dollar amount multiplied by the number of shares allocated to your apartment.
- Flat fee. A fixed dollar amount regardless of price.
- Tiered or graduated schedule. Rates that change with price brackets, holding period, or share count.
Typical ranges you might see
Industry guides commonly report that many NYC co-ops charge about 1 to 3 percent of the sale price when a percentage-of-price formula is used. Profit-based or per-share structures can vary more, and profit splits can be a double-digit percent of gain in some buildings. The exact figure is building-specific.
Who pays and when
- Who pays. The governing documents control this. Many co-ops require the seller to pay. Some put it on the buyer, allow a split, or let the board decide case by case. Even when documents assign it to one party, buyers and sellers often negotiate credits that shift the economic impact.
- When it is collected. The flip tax is usually collected at closing as a condition of the co-op consenting to the transfer. Closing counsel coordinates the calculation and disbursement. Some buildings require a deposit or escrow earlier in the process.
Legal enforceability and exemptions
- Enforceability. The flip tax must be properly adopted and disclosed in the governing documents. Because it is a contractual charge, it is not imposed retroactively on transfers that occurred before a change took effect.
- Common exemptions. Many co-ops exempt certain transfers, such as between spouses or domestic partners, by inheritance or probate, to an entity wholly owned by the shareholder, or transfers tied to foreclosure. The documentation and scope of exemptions vary by building.
How to verify your building’s flip tax
Start early so you can plan pricing, net proceeds, and cash-to-close.
- Proprietary lease and bylaws. These are the primary sources. Look for definitions of “Sale,” “Transfer,” “Selling Price,” “Profit,” and “Share.”
- Offering plan. For units sold under an offering plan, the plan discloses transfer provisions.
- Resale package. The management company or co-op secretary typically provides the current policy in the buyer’s package.
- Listing notes. Treat these as helpful hints, not definitive. The documents govern.
- Managing agent or board. Ask them to confirm the formula, who pays, any caps, and any recent amendments.
How a flip tax affects pricing and offers
Flip taxes affect what a seller nets and what a buyer needs in cash.
- Seller proceeds. If the seller is responsible, the flip tax is deducted from closing proceeds before commission and other costs. A 2 percent flip tax on a 1,000,000 dollar sale reduces proceeds by 20,000 dollars.
- Buyer affordability. If documents put the flip tax on the buyer, it adds to cash needed at closing and can affect loan calculations.
- Offer drafting. Clarify in the contract who pays and how credits work. Clean language avoids last-minute disputes.
- Negotiation. Buyers may request the seller cover some or all of the flip tax as a concession, especially in a buyer’s or neutral market. In multiple-offer scenarios, sellers may weigh how a flip tax allocation changes net value across competing bids.
Two quick scenarios
- Percentage of price. Sale price is 1,000,000 dollars and the building charges 2 percent of price. The flip tax is 20,000 dollars. If documents say the seller pays, that reduces seller net by 20,000 dollars.
- Percentage of profit. Sale price is 1,000,000 dollars, original purchase was 700,000 dollars, and the co-op charges 25 percent of profit. Profit is 300,000 dollars, so the flip tax is 75,000 dollars. The impact is much larger than a percentage-of-price approach.
Step-by-step checklist for Queens buyers and sellers
- Get the documents. Obtain the proprietary lease, bylaws, house rules, and offering plan if applicable.
- Confirm the formula. Is it percentage of price, profit-based, per-share, flat fee, or tiered?
- Identify the payer and timing. Who must pay and when is it collected? Any escrow required before closing?
- Check exemptions. If an exemption may apply, gather documents to support it.
- Ask management. Confirm any caps, temporary waivers, or recent amendments, and the exact payment instructions.
- Run the math. Add the flip tax to your seller net-proceeds worksheet or buyer cash-to-close estimate.
- Lock it into the contract. State which party pays or how credits will be applied at closing.
- Coordinate with counsel and lender. Ensure the flip tax shows on the closing statement and the payment routing is confirmed in writing.
Closing mechanics to expect
Your closing attorney or settlement agent will verify the formula and calculation, collect the flip tax from the responsible party’s funds, and remit payment to the co-op. The building’s consent to the transfer will be conditioned on payment. Lenders typically review required co-op certificates and will want confirmation that the building has consented and any flip tax has been accounted for. You should receive written confirmation of the payoff amount and recipient before closing.
Strategic tips to reduce surprises
- Sellers. Price with the flip tax in mind. If your building uses a profit-based formula, work through several price scenarios to see how your net moves. In a competitive market, you may get better outcomes by offering clarity on who pays in your listing terms.
- Buyers. Normalize your comparison set. Two similar apartments in different buildings can have very different net costs because of flip tax rules. If the buyer is responsible, add the flip tax to your cash planning upfront.
- Both sides. Use the flip tax as part of offer strategy. A clear allocation can be the difference between a winning offer and a near miss.
Ready to run the numbers?
The right preparation turns the flip tax from a surprise into a manageable line item. If you want to model outcomes for a specific Queens co-op, review building documents, and structure offers that protect your net, connect with William Martin for a private, investment-grade consultation.
FAQs
What is a co-op flip tax in Queens?
- It is a contractual fee charged by the co-op corporation on a transfer, used to support the building’s budget and reserves; it is not a government tax.
How do Queens co-ops calculate the flip tax?
- Buildings commonly use a percent of sale price, a percent of profit, a per-share fee, a flat fee, or tiered schedules; the proprietary lease or bylaws control.
Who usually pays the flip tax in NYC co-ops?
- Many buildings assign it to the seller, but some assign it to the buyer or split it; the parties often negotiate credits to shift the impact.
When is the flip tax collected at closing?
- It is typically collected at the closing table as a condition of the co-op’s consent, sometimes with a deposit or escrow required earlier.
Can a co-op board change the flip tax after I go to contract?
- Changes must follow the building’s amendment procedures and are not applied retroactively to transfers that occurred before the change took effect.
Are any transfers exempt from flip taxes in NYC co-ops?
- Many co-ops exempt transfers between spouses or partners, by inheritance, to wholly owned entities, or tied to foreclosure, subject to documentation.
Does a flip tax affect my mortgage approval as a buyer?
- Not directly, but if you are responsible for payment it increases cash needed at closing, which can affect affordability calculations.
Where can I confirm my building’s flip tax rules?
- Review the proprietary lease, bylaws, and offering plan, check the resale package, and confirm details with the managing agent or board in writing.
