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We charge a flat $500 flip tax on sales to add a few dollars to the reserves each year. We have been doing an assessment annually, approximating the annual coop abatements/star/senior/vet credits granted by the city and state. It helps keep the maintenance down without taking extra money out of everyone's pockets.
Join the Conversation Comments (1)Do most buildings exempt both or either sponsor owned units when the sponsor sells that unit and/or original shareholders (commonly called insiders) of the flip tax? If yes, can the 'rule' be changed to now charge them?
Generally, the prospectus allows the sponsor to transfer shares to a buyer without incurring any fees from the coop corporation. So, they are basically exempt from paying it. You could still charge the flip tax and collect it from the buyer. Nothing says the tax must be paid by the seller.
Thank you. Understand about the sponsor. What about original shareholders who brought during the 'red herring' period? Commonly called insiders, as they rented in the building prior to the conversion to coop status. Can they be required to pay the flip tax as well?
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Instead of a $500.00 flip tax there should be a % which would most likely bring in more revenue to the building. What is the reason for doing an assessment annually? That's a little much. I agree in keeping maintenance down, but doing annual assessments is almost the same thing as maintenance increases, as far as I can see. We have a 1% Transfer Fee on a sale, some buildings have a 2% which can be paid by the seller or broker or split between both. The % is the % of the sale price. If you sell an apartment for $400,000, the Fee coming to the building would be $4000.00. That's better than a flat fee of $500.00. What do you think?
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