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Needing your input.
Looking to see if co op share holders have a Flip Tax and how much when you decide to sell or buy. Also does anyone have a yearly assessment and a yearly maintenance raise. If so how much?
Thanking you all in advance.
I'll make this easier for you,
I'm Looking to see if co op share holders have a Flip Tax... and how much when you sell or buy. What %
Also does your board give you a yearly assessment and a yearly maintenance raise? How much a year?
Thank you in advance.
And I can make it much easier for you. Pose all your questions to a member of your co-op board or your managing agent. Since every co-op is unique in it's fiscal requirements, your board or MA will be able to provide you with answers that are specific to *your* co-op.
Now, if your are interested in the specifics of *my* co-op, I'll be happy to oblige.
We have a flip tax, and it is $8/share
We almost always have an annual maintenance increase that covers price increase due to inflation, staff salary increases, and other business factors. For the past few years we needed to have two maintenance increases because our building's assessed valuation increased by such a large amount (even with a tax certiorari reduction), that we would have had a negative cash flow by the end of the year. The rate of r/e tax increase has slowed, so we anticipate only one maintenance increase in CY'19
The only annual assessment we impose is to recover operating funds lost due to the annual Dept of Finance tax abatement. We calculate the assessment so it is as close to the abatement as possible, so the net to our shareholders is minimal. In the past we've imposed assessments for a lobby renovation, but we recently refinanced our underlying mortgage and took out enough cash so we don't anticipate any further assessments for capital improvements.
Please remember that this information is specific to my co-op. Your co-op's financial requirements are probably vastly different.
I hope this answers your questions,
--- Steve
more than 70% of nyc co-ops now have a transfer fee... it is supported by the lion's share of managing agents and real estate attorneys. i support it in my building which is trying to pass one. according to a seminar i went to, 2% of the gross sale price is the 'right amount.' assessments and maintenance increases are based upon multiple factors - assessments typically are needed for capital improvements while maintenance increases are related to building expenses and real estate taxes.
I should also note that the imposition of a share transfer fee (flip tax) must be authorized in one of the co-op governing documents like the Proprietary Lease. It was not included in the PL template used during most co-op conversions from the early 1980's. Failure to have the enabling language in the PL before the fee is voted on by the board can cause major headaches if an astute purchaser or attorney questions the fee. Check the Habitat Magazine archives for articles about this, or better, ask your co-op's attorney.
I'm in an HDFC where 5 shareholders got their units for next to nothing. Our flip tax is 30% of profit, meaning:
Sale price
-purchase price
- improvements
It does discourage turnover & limits sales to people who intend to stick around which works for us.
Our HDFC has a 50% flip tax. Yes, it discourages some buyers but they are not the type of people we want anyway since they don't plan on being here for the long term. We get no tax breaks (unlike most HDFCs) so the flip tax gives us a healthy reserve fund. We installed a new roof, new boiler, new windows and are about to have the entire façade re-done which will cost about $200,000. Our maintenance is very low. A good deal all around.
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Every Co-op is different and has different financial needs. Some have Transfer Fees ("flip tax") and some don't. Some base the amount on a constant, per-share basis, and some base the amount on the gross or net unit sales price. The dollar or percentage amount will vary between co-ops.
The same goes for maintenance increases and assessments. Co-ops with good fiscal management may or may not impose a maintenance increase depending on what their budget projections are for the coming year. Most increases will track at least increases in operating expenses due to inflation. There may be a larger increase if their real estate tax assessment spikes. They may also be proactive and are raising money gradually because they know they have a major capital expense coming up, like a new elevator or a new roof.
Assessments should be used for specific purposes, and not imposed on a regular basis. They are useful if the building is hit with a sudden large expense that may deplete their reserve and/or operating accounts. A building with little in reserve is a building destined for real pain.
The amounts are unique to the needs of the building. There is no rule-of-thumb for how much or how often.
Can you provide any background to your questions? It would help others provide you with a more definitive response.
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