How a flip tax works
A flip tax is a transfer fee your co-op charges when you sell your shares. Despite the name, it is not a government tax. The money goes to the co-op corporation, and the formula is whatever your building's governing documents say. The calculator applies that formula to your sale price.
New York law allows these fees. Business Corporation Law §501(c) says shares of the same class are not treated as unequal because of fees payable to the corporation on a sale or transfer, as long as the fees are provided for in the proprietary leases, occupancy agreements or offering plans, or in properly approved amendments to them.
The four common formulas
| Method | Formula | Example ($1.2M sale) |
|---|---|---|
| Percent of sale price | Sale price × rate | 2% → $24,000 |
| Percent of profit | (Sale price − your basis) × rate | 20% of $390,000 → $78,000 |
| Per share | Shares allocated to your unit × $ per share | 450 × $40 → $18,000 |
| Flat fee | Fixed dollar amount | $15,000 |
The rates in the table are examples to show the math, not typical figures. Each building sets its own method and rate, and its documents may treat particular kinds of transfers differently.
Worked example
You bought a one-bedroom for $750,000, put $60,000 into a kitchen and bath renovation, and are now selling for $1,200,000. Your building charges 20% of profit. Profit is $1,200,000 − ($750,000 + $60,000) = $390,000, so the flip tax is $78,000, or 6.5% of the price. If the building instead charged 2% of the gross price, you would pay $24,000. A profit-based formula charges nothing if you sell at or below your basis; a gross-price formula charges the same rate either way.
If your building's profit formula does not let you add improvements, leave that field at zero. Ask the managing agent which costs count and what proof they need.
Who pays it
The governing documents say who owes the fee to the co-op. Buyer and seller can agree in the contract of sale which of them bears it. If the buyer takes it on, the buyer needs that much more cash at closing, which can matter for a board that checks post-closing liquidity. Switch the "who bears it" option to see both sides.
Before you list
- Ask the managing agent for the current flip tax formula in writing, and whether the board has proposed changes.
- Check the offering plan and any amendments to the proprietary lease for any exemptions or special terms.
- Factor the fee into your asking price with the seller net proceeds calculator.
- Estimate your gain with the home sale capital gains calculator.
For the rest of the process, read selling a co-op and co-op flip tax: what it is and who pays.