HABITAT

Subscribe for Daily Updates!
4% Flip Tax Since 1999Jan 01, 2018

Our Co Op has sold record sales for apts. I find this crazy because these people that paid $750,000 to 1.1 million can not sell if they out grow 1 large bedroom or 2 bedrooms. Why? The flip tax is 4% broker fees are 4 1/2 to 6% for these share holders who want to sell in a few years they need to raise the cost to $900,000 to pay out 10%. The problem with lowering the flip tax is 98% of board members will never want to sell, they are here to stay. The new buyers are young and some with small children. Our area was hot but now Kennsington is selling apt.s for $350,000 to $425,000 some have no flip tax others have 1% and others buyer pays $1,500. I would like to have a share holder vote to lower the flip tax. We have great financials with well over 2 million in reserve. We have been very lucky with no bankruptcy or foreclosures. No one can predict what 2018 will bring. We have other share holders that brought this up but the board president changes the subject. Any suggestions? Thank you

Join the Conversation Comments (2)
Flip Tax - MK Jan 03, 2018

The wrong board members (self-serving) can destroy a co-op. But voting them out is not always feaseable. Plus it is often the control freaks who take the board positions. Once they get a stranglehold they do as they please without consideration of anyone but themselves. My board has a textbook narcissist who has a dual personality. Never again will I purchase a coop and be subjected the whim of gang of freaks! I hope the all rot in hell!

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
4% flip tax - Steven424 Jan 03, 2018

Check your proprietary lease and bylaws. Most contain provisions for a relatively low percentage (around 20%) of shareholders petitioning to have a special shareholder's meeting for a specific purpose. In this case it would be to lower the transfer (flip) tax.

Another possible avenue of approach is to thoroughly read your proprietary lease and bylaws. I believe one of the two documents must specifically authorize the imposition of a transfer tax before one can be levied on a share transfer. If you can't find anything in either document that looks like it authorizes a transfer tax, you may be in luck.

To be sure, though, I would hire an attorney who specializes in co-op and condo law to give you a final opinion. You may have to spend a few hundred dollars on the attorney, but 4% of $1,000,000 is $40,000. A worthwhile trade-off. Discuss with the attorney what your next steps might be.

Finally, canvass your fellow shareholders and see how many would also like to see the transfer tax lowered or eliminated. If there are enough, organize into an opposition party and put up a slate of candidates for the board. You have to be willing to do the work if you want to reap the benefits.

Good luck!

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (2)
Flip Tax - marym Jan 05, 2018

It's amazing how greedy people get when they decide to sell. This person knew full well coming into the co-op that there was a 4% flip tax. The fact that there's a healthy reserve fund means that the Board of Directors did a great job and I'm sure the maintenance increases were kept low because of this.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (2)
Flip Tax - peoples choice #1 Jan 05, 2018

marym, I tend to differ with you in so many ways. The healthy reserve is because the Board of Directors took out over a million dollar loan. The board raise our maintenance every year for the past 6 years from 15% to 3%. marym let's not forget the Board of Directors has raised the Assessment that is over a month maintenance. Do these new people know what they got themselves into. I don't think so nor did I.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
Reserve Fund Funding - Steven424 Jan 06, 2018

Hi MaryM - It sounds like the co-op you described is very lucky to have a lot of recent sales which produced a healthy amount of flip tax revenue. What does the co-op board do to keep maintenance low if there are *no* sales for a year or two or three? I would assume they need to approve an assessment, which, at the end of the day, sort of dampens their greatness.

There needs to be a balance between putting the burden of raising income on the backs of a select few (sellers) vs. spreading it out over all the shareholders. A 4% flip tax seems to me to be a heavy burden. In my opinion, a flip tax of 1.5% to 2% is much fairer. Any shortfall in the maintenance and reserve fund can be made up by imposing an assessment and spreading it out of 12 months.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
Reserves/Flip tax - Steve Jan 15, 2018

Along the lines of the recent comments, how would the budget meet its revenue target with a lower flip tax? If the building had to take out a loan already, pressure from lower flip tax revenue could require the board to increase another revenue source, and the maintenance fee is the typical target.
Could PC#1 (the original poster) offer a suggestion for reducing the co-op’s expenses? If the building spends less money, it needs less money. If there’s an outstanding loan, however, the flip tax revenue may very well go toward paying back the loan.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (2)
Reserves/Flip tax - Steve - peoples choice #1 Jan 15, 2018

Steve the loan is almost paid off and most likely the Board will get another loan shortly after.
The real estate agents have said our building has the highest flip tax. Steve we have excellent financials, way more then enough if we need a new roof. Our building is very well maintained and was highly sorted after until the monthly maintenance has been raised every year and the assessments have been increased to over our monthly maintenance. Nothing is being cut in the budget it's only going up. Thanks for your input Steve.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation Comments (1)
Loans - Steven424 Jan 16, 2018

PC#1, what kind of loan does your building usually take out, a Line of Credit or something else? I'm interested in what form of loan you find most effective and what your costs are to originate the loan in terms of percentage of principal amount.

Thanks!

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
Discretionary/non-discretionary income - Steven424 Jan 16, 2018

It's been my experience as a treasurer of 10 years that shareholders value consistency, especially when dealing with monthly maintenance and assessment payments. Besides the usual grousing every year from some shareholders when maintenance goes up, the vast majority of feedback we receive is that shareholders recognize expenses generally go up and rarely come down, so the board has to increase maintenance every year. As long as the shareholders perceive the increase is in line with inflation and extraordinary expenses are fully explained, they trust that they are getting good value for what they pay.

I would be very wary about balancing an annual budget that includes anticipated income from unit sales and the corresponding transfer fee (the PC way saying "flip tax"). Income from transfer fees is one of the most unreliable sources of revenue unless you're in a huge complex where there are historically a certain base number of annual sales.

As for reducing expenses, this can get tricky. The building across the street from ours tried to eliminate their part-time doorperson as a cost-cutting measure. They didn't have to raise their maintenance for a year or two, but the desirability of the building plummeted. Sales were much fewer and further between, and sales prices under-performed comparables in the area. A building can use cheaper materials and extend maintenance periods, but in the end the cost to remediate and repair will be greater.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation
4% flip tax - MK Jan 16, 2018

Having to hire an attorney when the board is unreasonable is pathetic! It is supposed to be a home and and place of comfort. But when you have the wrong board members and apathetic shareholders it is your only recourse. Either that or move. Once you hire an attorney you are labeled the enemy and trouble maker. Of course I speak from my own experience. Hiring an attorney is $$$$. A few hundred for the consult, but if you need them to step in and litigate you could easily run up a bill of 50 thousand. In fact I got a "what are you going to do about it, hire an attorney?" from the MA here. He panders to board members and is definitely not on the level. He should be guiding them in the right direction, instead he aids and abets. But again the shareholders complain bitterly yet don't want the responsibility. The board is more into divide and conquer and the backbiting is rampant.
I will never again move into a coop and endure the pettiness and hostility of miserable people. There is no community here and the board members like it that way. For the past 3 months the intercom has not been working. So individuals call the MAs office to complain. These people all use the same playbook they will tell you no one else has complained. Then when you speak with your neighbors you find out how full of it they are.
Sickened by the whole experience, I want a home not a dysfunctional dictatorship.

Thank you for rating!

You have already rated this page, you can only rate it once!

Your rating has been changed, thanks for rating!

Introduce yourself to other members of Board Talk! Login below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Register

Forgot your password? Click here

> Join the conversation

Introduce yourself to other members of Board Talk! Log in below or register here.

Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Introduce yourself to other members of Board Talk! Login below or register here.
Board Talk members who registered prior to March 9th, 2016 will need to reset their password.

Ask the Experts

learn more

Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

Source Guide

see the guide

Looking for a vendor?