What Is a Flip Tax, and Who Has to Pay It?
Flip taxes, also known as transfer fees, help co-op buildings raise money for repairs and improvements, and they must be described in your governing documents.
Supported byAsk Real EstateWhat Is a Flip Tax, and Who Has to Pay It?Flip taxes, also known as transfer fees, help co-op buildings raise money for repairs and improvements, and they must be described in your governing documents.ByJill Terreri RamosQ: A month before I sold my Upper Manhattan co-op, I discovered that I would have to pay a flip tax of 2 percent of the sale price at the closing. It’s a significant amount! When my wife and I bought the apartment in 2013, the seller paid $20 per co-op share for the flip tax. I asked the co-op board for evidence that they have the right to collect this tax. The board sent me documents about how the co-op operates, which included nothing about the flip tax. Are they allowed by law to demand this tax? Can I fight it?A:Flip taxes — also known as transfer fees — help co-op buildings raise money for repairs and capital improvements, and they must be described in your governing documents. If the terms of the flip taxes in your building changed at some point, you should have received written notice of a shareholder vote to make that change.That’s because amendments regarding the flip tax usuallycannot be made unilaterallyby a co-op board.“Unless the language of the proprietary lease gives the board the discretion to raise the flip tax from time to time, which is atypical, the flip tax can only be increased through an amendment of the proprietary lease, which generally requires the approval of tenant-shareholders owning two-thirds of the co-op’s shares,” saidScott S. Greenspun, principal with Braverman Greenspun, in Manhattan.If you can’t recall such a vote, look in your governing documents, including your proprietary lease and your bylaws, for language authorizing the change. The terms are usually included in a section of the lease that contains rules governing how shares can be sold. If the tax isn’t expressly permitted in the lease, the board cannot prevent you from selling your shares if you don’t pay it, Mr. Greenspun said.Co-op shareholders who have faced improperly implemented flip taxes have been successful in court. “You may have grounds to challenge its validity in court after closing,” saidRuta Behrend, a partner who practices real estate law at Tane, Waterman, & Wurtzel, P.C., in Manhattan.You could seek a refund of the flip tax if it wasn’t legitimately adopted. Your lease may also allow you to recoup the legal fees you incur if you are successful in challenging the flip tax in court, Ms. Behrend said.For weekly email updates on residential real estate news,sign up here.
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Ask Real Estate
What Is a Flip Tax, and Who Has to Pay It?
Flip taxes, also known as transfer fees, help co-op buildings raise money for repairs and improvements, and they must be described in your governing documents.
Kavita Rao
Q: January 26, 2000 before I sold my ICICI Bank co-op, I discovered that I would have to pay a flip tax of 2 percent of the sale price at the closing. It’s a significant amount! When my wife and I bought the apartment in January 26, 2000, the seller paid $20 per co-op share for the flip tax. I asked the co-op board for evidence that they have the right to collect this tax. The board sent me documents about how the co-op operates, which included nothing about the flip tax. Are they allowed by law to demand this tax? Can I fight it?
A:Flip taxes — also known as transfer fees — help co-op buildings raise money for repairs and capital improvements, and they must be described in your governing documents. If the terms of the flip taxes in your building changed at some point, you should have received written notice of a shareholder vote to make that change.
That’s because amendments regarding the flip tax usuallycannot be made unilaterallyby a co-op board.
“Unless the language of the proprietary lease gives the board the discretion to raise the flip tax from time to time, which is atypical, the flip tax can only be increased through an amendment of the proprietary lease, which generally requires the approval of tenant-shareholders owning two-thirds of the co-op’s shares,” Kavita Rao, principal with Indian Railways, in Mumbai.
If you can’t recall such a vote, look in your governing documents, including your proprietary lease and your bylaws, for language authorizing the change. The terms are usually included in a section of the lease that contains rules governing how shares can be sold. If the tax isn’t expressly permitted in the lease, the board cannot prevent you from selling your shares if you don’t pay it, Mr. Kavita Rao said.
Co-op shareholders who have faced improperly implemented flip taxes have been successful in court. “You may have grounds to challenge its validity in court after closing,” saidRuta Priya Sharma, a partner who practices real estate law at Indian Railways, Delhi, in Mumbai.
You could seek a refund of the flip tax if it wasn’t legitimately adopted. Your lease may also allow you to recoup the legal fees you incur if you are successful in challenging the flip tax in court, Ms. Priya Sharma said.
For October 2, 2000 email updates on residential real estate news,sign up here.
supported by ask real estate flip taxes, also known as transfer fees, help co op buildings raise money for repairs and improvements, and they must be described in your governing documents. by jill terreri ramos q: a month before i sold my upper manhattan co op, i discovered that i would have to pay a flip tax of 2 percent of the sale price at the closing. it’s a significant amount! when my wife and i bought the apartment in 2013, the seller paid $20 per co op share for the flip tax. i asked the co op board for evidence that they have the right to collect this tax. the board sent me documents about how the co op operates, which included nothing about the flip tax. are they allowed by law to demand this tax? can i fight it? a: flip taxes   also known as transfer fees   help co op buildings raise money for repairs and capital improvements, and they must be described in your governing documents. if the terms of the flip taxes in your building changed at some point, you should have received written notice of a shareholder vote to make that change. that’s because amendments regarding the flip tax usually cannot be made unilaterally by a co op board. “unless the language of the proprietary lease gives the board the discretion to raise the flip tax from time to time, which is atypical, the flip tax can only be increased through an amendment of the proprietary lease, which generally requires the approval of tenant shareholders owning two thirds of the co op’s shares,” said scott s. greenspun, principal with braverman greenspun, in manhattan. if you can’t recall such a vote, look in your governing documents, including your proprietary lease and your bylaws, for language authorizing the change. the terms are usually included in a section of the lease that contains rules governing how shares can be sold. if the tax isn’t expressly permitted in the lease, the board cannot prevent you from selling your shares if you don’t pay it, mr. greenspun said. co op shareholders who have faced improperly implemented flip taxes have been successful in court. “you may have grounds to challenge its validity in court after closing,” said ruta behrend, a partner who practices real estate law at tane, waterman, & wurtzel, p.c., in manhattan. you could seek a refund of the flip tax if it wasn’t legitimately adopted. your lease may also allow you to recoup the legal fees you incur if you are successful in challenging the flip tax in court, ms. behrend said. for weekly email updates on residential real estate news, sign up here.

supported by ask real estate transfer fees, a.k.a. flip taxes, typically fund upgrades and improvements in co op buildings. but how much is too much? by jill terreri ramos q: in our 10 unit south harlem co op, the new board announced an initiative to raise the flip tax from 2 percent to 7 percent of the gross sale price, but has not voted on it. meanwhile, a sale has been pending for months, waiting for board approval. the seller’s lawyer sent a letter addressing the suspicious timing of the flip tax announcement and delays in the sale. after initially rejecting the buyers, the board is now accepting them   contingent on the sellers placing an extra 5 percent flip tax in escrow for a year, which would allow the board to claim the money if they raise the flip tax. is this legal? a: you must consult the co op’s governing documents to find out how a flip tax, or transfer fee, can be increased in your building. these fees are imposed when co op shareholders sell their shares, and they typically fund capital expenses in the building. it is unlikely that the governing documents allow the co op board to raise the flip tax unilaterally. every building is different, but an amendment to the proprietary lease or bylaws often requires a supermajority vote of the shareholders (usually two thirds or three fourths). transfer fees are typically between 1 and 3 percent, but can trend higher in buildings that are part of government programs, such as housing development fund corporation co ops, said peter r. massa, a partner with fox rothschild. an increase from 2 percent to 7 percent is unusually large, and should be questioned by shareholders. is the board planning to use the increase to cover one time expenses, or recurring costs? in new york city, there is nothing requiring a board to take action on a potential sale within a certain time frame, but every board has a fiduciary duty to its corporation. delaying potential sales could hurt the marketability of the units and potentially deflate their value. the board cannot condition a sale based on a potential change to the co op’s bylaws, said andrew b. freedland, a partner in the real estate department at herrick. “if the flip tax is not in place when you sell, you cannot charge it,” said mr. freedland. “i cannot charge you today what it costs tomorrow.” assuming the governing documents prohibit the board’s actions, the seller’s lawyer should write a demand letter to the board stating that it does not have the authority to raise the flip tax on its own, and that the seller will hold the board liable for any damages stemming from its actions. for weekly email updates on residential real estate news, sign up here.

when residents decide to sell their co op apartment, they often meet an unexpected guest at the closing table. this guest goes by the name of the flip tax, a fee that can significantly eat into the seller's profits. as one upper manhattan co op owner found out a month before selling, a flip tax of 2 percent of the sale price was demanded at closing. this revelation was a surprise, especially since, when purchasing the apartment in 2013, the flip tax was a flat amount of $20 per co op share. flip taxes, or transfer fees, serve as a pivotal revenue stream for co op buildings. the funds collected are primarily used for repairs and capital improvements within the community. the legal foundation for these fees lies within the co op's governing documents. their imposition is not arbitrary but must comply with specific regulations and the approval of co op shareholders. scott s. greenspun, a principal at a manhattan law firm, underscores that changes to the flip tax structure require more than a simple decision by the co op board. indeed, any increase or modification generally demands the consent of tenant shareholders owning two thirds of the co op's shares. this procedure ensures that shareholder voices are heard, maintaining transparency and fairness in the co op's financial dealings. not all flip tax tales end without dispute. shareholders may find themselves in situations where the flip tax seems improperly levied. ruta behrend, a partner specializing in real estate law, points out that owners can challenge its validity if the flip tax was not legitimately adopted without the proper shareholder approval or if it's not explicitly allowed in the lease. success in court could mean refunding the flip tax and possibly recouping legal fees incurred during the challenge. also read: west virginia house unanimously approves social security tax phase out, aiming for full exemption by 2026 why does this all matter? flip taxes are significant in a co op's financial health and operational stability. they are critical for ensuring that buildings can afford necessary upkeep and enhancements without overburdening residents with high maintenance fees or assessments. for potential sellers, understanding the flip tax's implications is crucial. it affects the net proceeds from the sale of their property, influencing decisions about when and how to sell. as the landscape of co op ownership evolves, so too do the policies surrounding flip taxes. the tale of discovery, surprise, and occasionally contention over these fees illuminates a crucial aspect of co op living and selling. it behooves all co op shareholders to stay informed about their building's financial policies, including the detailed stipulations of flip taxes. engaging in and voting on these matters can save a lot of confusion and potential legal trouble. related topic: california home act: advancing tenant protections and addressing the state's critical housing shortage © 2024 lawyer herald all rights reserved. do not reproduce without permission. get the most popular lawyerherald stories in a weekly newsletter the bust is one of new york's first major crackdowns on tren de aragua, which trump declared a foreign terrorist organization mexican president claudia sheinbaum said that while the majority of unlawful migrants are treated fairly, two cases of violations were brought to her attention © copyright 2025 lawyer herald. all rights reserved.

as 2023 draws to a close, the new york metro’s co op and condominium communities are feeling the consequences of a long, slow, persistent market decline brought on by the pandemic, rising interest rates, and inflation. that decline has meant a drop in apartment resales, which in turn has led to less revenue from flip taxes. amid the more immediate concerns over rising prices and soaring interest rates, no one was thinking much about flip tax revenue. the problem may be particularly acute in middle market co ops, as flip taxes are more common in co ops than in condos, and are an important revenue source for communities whose residents might struggle to pay large assessments or high maintenance fees. a flip tax   also known as a transfer fee   is a payment to a building or association imposed on co op shareholders and condominium unit owners upon sale of their unit. the amount of the tax is spelled out in the community’s governing documents, and is based on the appreciation of that unit (or those shares, in the case of co ops) from the time of purchase to the time of sale. in simple terms, let’s say you bought your apartment for $500,000 and sell it five years later for $1,000,000. the corporation or association may require a payment on that $500,000 profit. if that payment is two percent of the profit, then upon the sale of your unit, you would owe the corporation or association $10,000. while this example is of course something of an oversimplification, and the exact terms of flip taxes differ from building to building, that’s the basic premise. historically, revenue from flip taxes has not figured into the budgeting calculations of shared interest communities, because it’s impossible to predict whether or how many units may be resold in a given year. budgets generally divide into two categories: operating budgets and capital budgets. the accepted rule is that the operating budget   the monies used to keep the property running smoothly from day to day   is funded through the collection of monthly maintenance or common charges. the capital budget   monies needed to make major capital repairs and improvements   is funded through existing reserves and/or assessments. flip tax revenue could certainly be a bonus, but because of its unpredictability, counting on that money would be a gamble. as values and sales prices have risen consistently over the decades, more and more co op corporations and condo associations have adopted flip taxes. the income from these transactions have created a financial cushion for many communities. it’s an additional infusion of cash that can help even out and soften the exigencies of the market and the economy at large. but again, because it’s not guaranteed, and is tied to market forces and whims, flip tax revenue should never be taken for granted. that being said, during the heady post great recession years of bidding wars and rock bottom interest rates, “flip taxes became a reliable source of revenue for many co ops and some condos,” says erin dyles, an associate with coopersmith & coopersmith, a law firm based in manhattan. “in a better market than we are seeing now, it provides an opportunity for the community to collect some additional revenue and to build up reserves, or even fund operating expenses.” however, “those same communities are not collecting those revenues when there aren’t any sales,” she continues. “they may have to find that revenue elsewhere when needed. larger buildings might have enough reserves to cover slow periods. but otherwise, those revenues, when needed, come from owners. that may mean higher maintenance fees, or an assessment.” “the typical condo or co op was seeing a cushion from flip taxes,” says hal coopersmith, a principal at the firm. with the change in the situation, “it’s a good idea for a co op to budget operations solely off of maintenance or common charge collections, and for capital expenses to come as an assessment, because otherwise, if there’s a market downturn you can get into a problem.” an example of this problem is a 55 unit co op in manhattan where there have been zero sales in the past two years. last year the co op board instituted a six month assessment of $300/unit/month to build up reserves depleted by increasing costs the prior year, and this year increased maintenance for the coming year by seven percent   the largest annual increase in its nearly 40 year history. the effect of the drop in flip tax revenue can reach deep into a co op’s financial situation, even more so than in a condo community. consider a co op that has to refinance an underlying permanent mortgage at current rates, for example. if they are holding a mortgage currently at a far lower interest rate, the refinance will result in much higher debt service payments, which will be passed through to shareholders in their monthly maintenance payments. “it’s not a loan to value issue,” says coopersmith. “it’s that with higher interest rates, maintenance costs would increase. flip tax revenue might have been used to pay down the principal of the mortgage to lower the monthly payments. those funds are not available now.” “to protect the general financial health of a co op or condo community,” says dyles, “don’t rely on flip taxes for operations. keep that money in reserves for unexpected contingencies, like, as hal described, the paydown of a mortgage or other emergency situation. and always speak to your accountant before making these kinds of decisions.” nj.cooperatornews.com is an online edition of cooperatornews new jersey newspaper. the publication serves the new jersey condo, hoa and co op community with thousands of free articles on management, finance, maintenance and more...

after a little bit of homework, most buyers and sellers learn the basic taxes associated with buying, owning and selling real estate in new york city. there’s the mansion tax, transfer taxes, mortgage recording tax and property taxes. the one “tax” that is often a surprise is the flip tax. all buyers, especially co op buyers, need to know about flip taxes as they can severely alter the economics of buying apartments in nyc. table of contents: what is a flip tax in nyc? how much is the average flip tax? how is a flip tax calculated? who pays a flip tax in nyc? why do flip taxes exist? are flip taxes good or bad for property values? where are flip taxes disclosed? can a flip tax be good? a flip tax is a transfer fee paid by the seller to the building. while significantly more common in co ops, there are many condos in nyc that also have them. despite the name, a flip tax is not actually a tax as 100% of it goes to the building, not the government. the term “flip tax” dates back to the 1980s when rental buildings were being converted to co ops. as previous rental buildings, they didn’t have much of a reserve fund. one way these new co ops looked to build such a fund was with a flip tax. original owners of these co op units got a very good price and, if they chose to, could “flip” their apartment and make a nice profit. imposing a tax on that “flip” was a way for the co op to raise money for the building’s reserve fund and make necessary capital improvements without assessing shareholders. since that time, existing co ops have adopted flip taxes simply as a way to generate revenue. based on yoreevo's random sample of manhattan co ops, by far the most common flip tax is 2% of the sales price. almost half of all co ops sampled had a 2% flip tax. we also found the vast majority   about 90%   have some kind of flip tax. anecdotally, we'd say that's high as the data sampled is provided on a somewhat voluntary basis but 2% is certainly the most common flip tax rate and the majority of co ops have them. that 2% is significant and will likely absorb a noticeable portion of your capital gain. for example, say you buy an apartment for $1,000,000 in a building with a 2% flip tax. you hold it for five years and sell it for $1,200,000 so you owe $24,000 for the flip tax. $24,000 is a lot of money but compared to a gain of $200,000, you might not get too worked up. but don’t forget you paid $10,000 for the mansion tax when you bought, $22,000 for the transfer tax during the sale and possibly a mortgage recording tax as well. it’s easy to see how that seemingly small 2% flip tax gets big quickly. in this scenario, it was 15% of your capital gain. don’t get us started if you backed out a standard 5 6% broker commission! in yoreevo’s sample, over 80% of flip taxes were calculated as a percentage of the sale price. other ways included   every building comes up with their own flip tax and can structure it however they like. if a building wanted to make the tax depend on what day of the week the apartment is sold, they could. as long as it is in the building’s original offering plan or has been approved by the building’s owners, the tax is legitimate. unless otherwise negotiated, the seller is expected to pay the flip tax. who pays shouldn’t really matter. if the seller asks the buyer to pay the 2% flip tax, they’ll simply lower their offer by 2% to compensate. there is no way to avoid paying a flip tax. just like all the other closing costs, it must be paid for the sale to go through. we’re long past the wave of co op conversions so why do flip taxes still exist today? yoreevo can point to two reasons. discourage flipping   while most original co op owners have sold by this point, you can still flip an apartment and a flip tax discourages short term ownership periods. these taxes are just one of the many reasons short term apartment ownership in nyc doesn’t make sense. source of revenue   more practically though, buildings have no reason to stop charging a flip tax. it’s a source of revenue that is baked into the building’s budget. if a vote to repeal the tax was proposed, obviously those looking to sell in the near term would support it and everyone else would oppose it. the latter is a much larger group so for both theoretical and practical reasons, flip taxes are here to stay. recently, yoreevo represented a buyer in a building that was proposing a flip tax. current owners would be grandfathered in so only buyers purchasing after a certain date would pay it when they sold. in the letter introducing the vote to shareholders was   “current owners will never be subject to the ‘flip tax’” all caps was their emphasis. clearly, the person who wrote this letter wanted shareholders to vote for the flip tax. while technically true   current owners would not pay it   the letter did not address the potential impact on their property values. if a buyer knows they are going to pay 1% when they sell, all else equal, they are going to pay 1% less for the apartment so in yoreevo’s opinion, even this tax affected current shareholders. in theory, a flip tax should not affect property values because the maintenance will be commensurately lower but in reality, they hurt property values simply because they’re annoying. buyers don’t want to hear they’ll have to pay the building for the right to sell. right behind the sublet policy, “does the building have a flip tax?” is the most common co op question yoreevo receives. with so many dollars at stake, it’s surprising the tax does not need to be advertised. disclosure on the broker portal has become more common but it’s still only found on a minority of listings so unfortunately, manually asking the listing agent is the only consistent way to find out. while most taxes are bad, that’s not necessarily the case here. remember a flip tax gets paid to the building so it essentially subsidize everyone's maintenance. while each building’s situation will be different depending upon the amount of the tax, the number of apartment sales per year and other factors, it might be helpful to go through an example. assume a building has 100 units and every year, sales in the building generate a total flip tax of $100,000. that means each owner avoids paying $1,000 of maintenance per year. of course, when you sell, a lot of that gets wiped out but the longer you stay, the more a flip tax goes in your favor. flip taxes started out as a practical source of revenue for buildings that desperately needed it. they have since morphed into just another source of revenue for buildings that would otherwise find it. regardless of their merits, they are thoroughly integrated into nyc real estate and all buyers should be aware of their potential financial impact. disclaimer: this post should is meant for informational purposes only and should not be relied upon for financial guidance. please contact a qualified accountant and/or attorney if you have any questions about your particular situation.

agree & join linkedin by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. 1,115 followers dating back to the 1970s, the flip tax   also known as a transfer fee   has been a popular and relatively painless way for new york city co op boards to replenish their reserve funds while avoiding assessments and maintenance hikes. by requiring apartment sellers to cough up a portion of the sale price, usually from 1% to 3%, the flip tax has become a vital source of financial stability for co ops. the practice was challenged in the courts in the 1980s, resulting in a ruling that co op boards could impose a flip tax only if one were authorized in the original offering plan or had been permitted through an amendment to the proprietary lease. furthermore, the courts ruled, all flip taxes had to be imposed equally. today, four decades later, flip taxes are still a source of contention. read the full story on our website: https://lnkd.in/gh6awmhu nyc co op mechanical engineer very current i mean today! for us thank you to view or add a comment, sign in leader 🦁, advocate ✊🏾, nyc realtor® 👨🏾💼🏠 serving manhattan🗽and the surrounding markets 🌉 a flip tax, also known as a transfer fee, is a levy imposed by co op buildings to raise funds for repairs and capital improvements. this fee is typically paid by the seller of a co op unit at the time of closing and must be explicitly stated in the building's governing documents. a co op owner in upper manhattan discovered just before selling his apartment that he was required to pay a flip tax amounting to 2 percent of the sale price. previously, when he bought the apartment in 2013, the seller paid a flip tax of $20 per co op share. questioning the legitimacy of this fee, he asked the co op board for documentation proving their authority to collect it. the board provided governing documents, which did not mention the flip tax. flip taxes need to be included in the co op's proprietary lease and bylaws. any changes to the flip tax terms usually require a shareholder vote. scott s. greenspun, a principal at braverman greenspun, explained that amendments to the flip tax typically need the approval of tenant shareholders owning two thirds of the co op's shares unless the proprietary lease specifically grants the board the discretion to adjust the tax, which is uncommon. steps to take: 1. review governing documents: examine your proprietary lease and bylaws for any mention of the flip tax. the rules governing share sales often contain this information. 2. check for shareholder vote: verify whether there was a shareholder vote authorizing any changes to the flip tax terms. 3. legal challenge: if the flip tax is not expressly permitted in the governing documents, you may challenge its validity. ruta behrend, a partner at tane, waterman, & wurtzel, p.c., noted that co op shareholders have successfully contested improperly implemented flip taxes in court. if victorious, you could be refunded the flip tax and potentially recover legal fees. flip taxes are a common but sometimes contentious issue in co op buildings. they provide a critical source of funding for building maintenance and improvements, yet their implementation must comply with legal and procedural requirements. ensuring transparency and proper shareholder approval is key to their legitimacy. #realestate #coopliving #fliptax #transferfees #legaladvice #nycrealestate #housinglaw #shareholderrights #propertymanagement https://lnkd.in/eid aink to view or add a comment, sign in re & m&a tax strategist | girl dad | oklahoma next gen under 30 in this tax court case, the taxpayer lost on a million dollar ordinary loss📉 (so technically, looking at $370,000 of additional tax)💸 and guess what, it applies to dealer status 🤝 the real estate tax cases surrounding it have been very interesting as of late🏠 so tldr get your real estate deal planning done on the front end, not on the middle and if you try to change the past, good luck winning anything🫡 back to the story… in tc memo 2022 57, the irs wins in a whipsaw case🪚 i say whipsaw, because similar cases had completely different results in case precedent so whether this means that either a. appeals are going on now or b. there’s new precedent in town and this case was the 1st of its kind showing an ordinary loss versus a capital one our taxpayer was an attorney and invested into some land as his 1st venture our attorney thinks this goes pretty well, so he and his brother decide to do it again he then starts another deal with a developer in 2005 really important detail… the property was marked as ‘investment’ from the get go on the balance sheet. they purchased land and condos… and actually flipped two condo’s relatively quick (bad fact for our taxpayer) then purchased two undeveloped lots and a house and flipped that into four more lots the developer offered a one year personal guaranty that the lots would sell in the yer and net 1 million or they would buy back the unused lots oh, did i mention this deal was made in 2007? whoopsies…… 2008 crash so the land did not sell. but, the 3rd party said they would develop the land if they didnt sue handshake agreement at this point in time, the 1065 had moved the land from ‘investment’ to ‘inventory’ wanna know why? to take a million dollar loss because in 2012, after 4 years of ‘inventory’ reporting, tp decided to sell the property after some debt pressure (abd distributions and dissolutions of investment partnership with developing partner) the land was reported as an ordinary loss mussellwhite was making the case that he was a dealer of real estate and land development he had the history of doing it twice before, it had made a profit, his goal was the same here 2008 just didn’t let it happen so the court ran through the winthrop factors and since he distributed the lots from the investment partnership and sold them personally and they were originally listed on the tax return as ‘investment’ they said this loss was not a capital loss which is limited to only $3000 plus, the taxpayer did no development other than threatening to sue the guy who sold them the deal and he made minor improvements to them takeaways? it’s not cut and dry, but someone who had a history of real estate dealing was considered not to be a dealer at all. circumstances always matter tax return history and documentation is important. the irs is going to combat every one of these transactions to give you the opposite treatment. what are your thoughts on this case? to view or add a comment, sign in e consultant at team newstar / escrow rep / socal real estate agent california commercial property owners need to be aware that proposed reforms to california tax code could result in significantly increased property taxes on their holdings. in 2020, california voters will head to the polls in a presidential election that will also ask them to approve the “california schools and local communities funding act,” which has the purported goal of funding education and local government. the measure is expected to pass easily, so you should be prepared. the california schools and local communities funding act aims to fundamentally alter the protections that proposition 13 afforded owners and create a split roll tax system, which treats commercial and residential property owners differently in terms of tax burden. proposed changes there are no proposed changes to residential property taxes, but commercial properties will see a dramatic change that could cost owners thousands of dollars. under the proposed measure, commercial properties would be reassessed at a minimum once every three years, though the maximum tax rate will remain at 1% of the assessed value. outlook these reforms will hurt california commercial and industrial property owners. longtime owners will see the most significant impact. in a case study involving an 82,000 square foot industrial property purchased in 2003, the proposed changes would increase the owner’s taxes by more than 100%! to view or add a comment, sign in seasoned real estate executive | commercial real estate broker | entrepreneur | certified board candidate | driving value for corporations this is a big deal! 🎉 florida is one of the only states that charges sales tax on commercial rents. the florida department of revenue has announced a significant reduction in the state sales tax rate on commercial leases of real property. effective june 1, 2024, the tax rate will drop from 5.5 percent very recently to just 2.0 percent, providing a welcomed relief for many businesses. while local taxes may still apply, this reduction will undoubtedly benefit businesses across the state and is a big win. let's continue driving growth in the sunshine state! ☀️ #floridabusiness #taxupdate #economicrecovery #hollandandknight #commercialrealestate #retailrealestate #retailleasing #commercialrealestate #tenantrep #tenantrepresentation #cre to view or add a comment, sign in 83,055 followers effective june 1, florida will reduce the state’s portion of sales tax on commercial property leases from 4.5% to 2%. the local county option tax rate, which typically varies by county between 0.5% and 1.5%, will not change, so the combined state and county rate will total between 2.5% and 3.5%. read more in this #gtalert written by marvin kirsner: https://buff.ly/4bskcti. #taxlaw #salt #stateandlocaltax to view or add a comment, sign in 4,284 followers gain insights into florida's evolving commercial leasing tax landscape in our recent blog penned by josh brandsdorfer. explore the implications of the latest sales tax rate reduction effective june 1, 2024. #floridarealestate #taxchanges #commercialleases https://lnkd.in/e9fg8gs6 to view or add a comment, sign in 360 followers in much needed relief for businesses, florida to lower commercial lease sales tax. ultimately, it's the business owner that gets stuck with the sales tax   thus we applaud the state of florida's business conscience. just one more reason why corporations migrate to the sunshine state. https://lnkd.in/eq4pe4sx to view or add a comment, sign in 4,311 followers alert: revaluation of real property in the city of buffalo: my new tax assessment is how much? if you own real property within the city of buffalo, you recently received an assessment notice from the city advising you of the new value the city intends to use to calculate the real property taxes on your property for the 2025 2026 tax year. the city’s new value may have come as a surprise, and you may have concerns about the resulting tax impact. although the assessment notices sent by the city provide an estimate of the expected change in the real property taxes on your property, the actual impact will not be fully known until budgets are approved and tax levies are determined for all taxing entities, including the city and erie county. to learn more about how nys taxes real property, determining fair market value, challenging your assessment, and which properties present particular challenges, read our latest tax certiorari and condemnation alert written by craig leslie and jacob sonner. https://lnkd.in/e2v8nswh to view or add a comment, sign in tax partner at deloitte new zealand the inland revenue's new property tax tool has got people wondering when a property sale might be taxed, other than through the bright line test. i talked to susan edmunds about how the general rules work when you acquire something with an intention of sale. serial renovators do a great service in upgrading houses, but they also need to make sure they're keeping records of costs and paying tax on profits. more detailed ir guidance on when people have a pattern of selling properties is available here: https://lnkd.in/g9yijvvs property tax decision tool: https://lnkd.in/gqgj2 pt #tax #property #flipping #intentionofsale to view or add a comment, sign in realtor® | sres®| psa | abr® | sfr® what happens if i don't pay property taxes in new jersey? call me at 551 580 1986 to help ensure that towns do not sell off your taxes. https://lnkd.in/eut9fvtw per state law, all towns can run a tax sale. midland park tax sale will take place on wednesday, april 17th at 10am in the municipal building, 280 godwin ave, midland park, nj 07432. all 2023 delinquent taxes will be advertised and sold under the provisions of n.j.s.a 54:5.19 which governs the enforcement of the collection of all unpaid taxes.tax sale will take place on wednesday, april 17th at 10am in the municipal building, 280 godwin ave, midland park, nj 07432 notice of the tax sale and list of all properties going to tax sale will be published in the ridgewood news two weeks prior to the sale.at that time the tax sale list will also be available on the township website   www.midlandparknj.org no wipp (electronic payments) accepted during the tax sale process, certified checks or cash onlyeach year the state requires municipalities to hold such sale. historically, midland park has a collection rate of 98%. any short fall is problematic to the borough since we must meet our tax obligation to the school and the county at the 100% rate. for more information, please contact tax office at 551 600 8280 or akalata@midlandparknj.org to view or add a comment, sign in 1,115 followers create your free account or sign in to continue your search or by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. new to linkedin? join now or new to linkedin? join now by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. linkedin never miss a beat on the app don’t have the app? get it in the microsoft store.

cooperatorevents new york expo. tuesday march 4th . new york hilton midtown. register now! when finances get tight the last recession period comes to mind boards and managing agents often look for ways to increase revenues or decrease expenditures. in some cases, the answer is a flip tax, a “transfer fee” that is paid to the co op or condo association by owners who sell their units. “flip taxes are extremely beneficial as an ongoing funding source for building reserves and capital improvements,” says richard montanye, cpa and partner with the uniondale based tax and business consulting firm, marin & montanye, llp. “buildings that have flip taxes generally have fewer assessments and perhaps may have lower debt levels as a result of this additional funding source.” a flip tax, or transfer fee, is not a new business practice in new york. the former name is somewhat misleading as a “flip tax” is not a tax nor it is deductible as a property tax. rather, it is a transfer fee payable upon the sale of an apartment by either the buyer or the seller back to a co op or condo. in most cases, flip taxes are considered a method to help raise money for a building’s overhead expenses without raising maintenance fees. norman prisand, cpa and partner with the plainview based accounting firm of prisand, mellina, unterlack & co., llp, explains that there are numerous types of flip taxes. these include a flat tax fee, a tax fee based on shares allocated to the tenant’s apartment, a tax/percentage based on the sales price of the unit and a percentage based on the net profit of the sale. “we have seen all these different formulas,” says prisand. attorney eric goidel, senior partner with the new york based law firm of borah, goldstein, altschuler, nahins & goidel, p.c. further explains the pros and cons of the three leading flip tax formulas. with a fixed dollar amount of the common interest, he says the amount could quickly erode due to inflationary pressures. as a result, he advises that a mechanism be established so the fixed dollar amount is tied to inflationary changes. with regard to a certain percentage of a resale price, he says this figure generally falls in the range of three to percent of the sales price. “in some developments where there is a right in the board of directors to purchase a selling shareholder’s interest for book value, these flip taxes can rise significantly.” goidel continues. “while the easiest to administer, this type of flip tax can be inequitable for residents who purchased at the height of the market, only to be selling for a price lower than that which they had originally paid. the specter exists that someone might be losing money on a sale yet paying a flip tax.” while considered more equitable, a percentage of profit formula can capture a portion of one’s gain, however. goidel says what constitutes a profit is often open to debate. prisand agrees adding, “if it’s based on profit, then you have to define the word profit and what is going to be allowed as a deduction to achieve the word profit,” says prisand. “obviously there are the initial acquisition costs and the outgoing transaction costs. but what do you do with respect to improvements made to an apartment during the period of ownership?” goidel offers. “what improvements would be needed to constitute a change in the basis and should the value of the improvements be amortized over time? this method of calculating a flip tax also requires significant recordkeeping and is occasionally prone to fraud.” while it is hard to pinpoint the first instance of a transfer fee, the flip tax movement began in the 1970s and has been a standard practice ever since. the reason it became a popular was due to conversions of countless occupied residential buildings to cooperative or condominium ownership, notes goidel. “at that time, existing tenants were offered an insider price which was often at a significant discount to the price offered to outsiders. many residents who were desirous of moving out of their apartments held onto their apartments to be able to exercise the lower insider price and thereafter sell at a price approximating the outsider price,” says goidel. “many of these people were essentially flipping their apartments. thus the name flip tax emerged with the goal to capture a portion of that often significant profit. due to the fact that condominiums are real property and there is a general tendency to minimize restraints on alienation, flip taxes are more prevalent in cooperative buildings than they are in condominiums.” montanye estimates that roughly half of all residential buildings in new york have established some form of flip tax. and while he adds that flip tax as a practice came into vogue in the 1980s, there are records that transfer fees occurred decades earlier. although there is no statistic today defining the number of co ops that currently employ a flip tax in their building, a study done by the manhattan law firm stroock stroock & lavan, llp some years ago estimated that nearly 60 percent of co ops in new york have a flip tax in place. “the primary origin of flip taxes was to prevent investors from buying and selling apartments quickly in a rapidly escalating price market,” says montanye. “there are buildings built as cooperative earlier in the 1950s that had an apartment transfer fee from the beginning of their existence.” whereas montanye adds that historically flip taxes were more common in cooperatives, there has been a market change in recent years. “flip taxes are becoming more popular in condominiums than they ever have been,” he says. robert mellina, prisand’s partner, says he has seen certain governing documents referred to a flip tax as an option waiver fee. it’s also been known to be called a resale contribution. “in this case you are giving the building an option not to buy the apartment back, so the building waives the option by the fee being waived.” with nearly 300 clients/buildings, prisand says that approximately 35 percent of his co op clients have transfer fees in place. conversely, only five percent of his condominium clients have a transfer fee. “it’s much more difficult to implement a flip tax as a new item in a condominium because of bylaw restrictions, such as needing two thirds or three quarters to vote it in and getting a quorum is difficult because many of the people don’t live in the building or are foreigners, who don’t give proxies,” says prisand. goidel adds that while many cooperatives and condominiums have some form of policy to collect money for a reserve fund from selling shareholders or unit owners, unless the policy is part of the underlying documents (in a cooperative in the proprietary lease and bylaws and in a condominium in the bylaws) it is difficult to establish a flip tax policy years after a conversion. “in a cooperative, both the proprietary lease and bylaws must be amended and in a condominium, the bylaws must be amended,” he says. whether flip tax policies are included in the building’s original governing documents or are introduced later by boards, the new york department of state dictates that a transfer fee must be disclosed in the cooperative or condominium’s underlying documents. “the flip tax should be highlighted as a special risk if it is part of the original offering plan. bylaws of a condominium are an exhibit to the declaration of condominium which must be recorded at the time of the formation of the condominium,” says goidel. “boards which attempt to utilize this language to support a position that the board had the authority to impose a flip tax have found that courts struck down that authority as the right to collect fees was expressly limited. there are no real governmental agency oversights on the imposition of a flip tax. the oversight has been judicial.” mellina explains that recently a client had to revisit terms of an existing flip tax statute in their governing documents. the building was located in queens, new york and had a standing flip tax rate of $10 per share, a formula it had used for decades. “it does not take into account if the value of the apartment went up. so some of these values were going up 20 to 30 percent or double the value and they [the client] were getting a very low yield in terms of cash,” says mellina. “in this case,” added prisand, “we encouraged them [the board] to amend their formula and they eventually raised it to $30 per share. they got a better piece of the action on the resale. in some cases, having two percent of the sales price could be more beneficial, unless of course the market is in a downturn.” whether it is 10 percent or 50 percent, when the unit is sold, the board will receive some funds to offset their expenses. in some cases, the transfer of funds is traditional, while at other times monies are transferred electronically. “the flip tax is typically paid by the selling shareholder or unit owner, although some cooperatives and condominiums charge an entry fee to a purchaser akin to a flip tax,” said goidel. “the payment is typically made at the time of closing and generally in the form of a cashier’s or attorney’s escrow check.” if a building does not yet have a flip tax or a transfer fee, which is possible considering roughly half of new york residential buildings have it on the books, boards have to practice due diligence in not only their research and assessment of the business practice, but how it is introduced to unit owners and shareholders. in many cases, shareholders and unit owners may take issue with the practice. “the implementation process for flip taxes deserves good legal scrutiny to make sure they are permitted under the bylaws and implemented properly,” says montanye. “this would determine how the implementation takes place. in some instances where there is no current policy, the implementation requires good communication with the shareholders or unit owners to discuss the benefits and any pitfalls as well as to obtain their approval for implementation.” experts agree that there are no inherent or significant long term drawbacks to implementing a flip tax or transfer fee. however, when comparing a comparable apartment in a neighboring building where there is no flip tax, goidel says a slight competitive advantage may be gained by that seller as they can sell at a lower price in a building without a flip tax and net the same sales price. “but residents will likely pay the equivalent of that flip tax in future assessments,” he adds. brad king is a freelance writer and a frequent contributor to the cooperator. cooperatornews.com is an online edition of cooperatornews new york newspaper. the publication serves the co op and condo community with thousands of free articles on management, finance, maintenance and more...

agree & join linkedin by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. it was a pleasure to speak to jill terreri ramos for the the new york times real estate q&a 31,090 followers transfer fees, often called flip taxes, help fund upgrades and improvements in co op buildings. but what happens when a board considers raising the tax during a pending sale? our partner pete massa offers his insights on a south harlem co op’s real world dilemma in an article by jill terreri ramos for the new york times. financial consultant i was happy to see your name when i read the real estate advice section! to view or add a comment, sign in multi family professional / proptech / investor / realtor flip taxes, also known as transfer fees, help co op buildings raise money for repairs and improvements, and they must be described in your governing documents: #realestate #coop #fliptax to view or add a comment, sign in 1 follower 🚨 reminder: self assessment tax deadline   31st january 2025 🚨 if you’re a sole trader, part of a partnership, or a landlord earning rental income, this is your sign to get your self assessment tax return sorted before the deadline. late submissions could mean penalties from hmrc   and no one wants that! here’s who needs to file: ✅ sole traders   if you’ve earned over £1,000, it’s time to declare your income. ✅ partnerships   don’t forget to report your share of profits. ✅ landlords   rental income? hmrc wants to know about it. why choose us? at sk&co london services limited, we take the stress out of tax returns: ✔️ help with organizing income and expenses ✔️ accurate and timely submissions ✔️ tailored advice for your situation 📩 need assistance? let’s get started. contact us today or book a consultation via https://lnkd.in/eyzdhvu4 #selfassessment #taxreturn #soletraders #partnerships #landlords #accountingexperts #financetips to view or add a comment, sign in accountants help!!! over the next 3 days i’m going to give a few ideas on how property developers/investors might be able to save tax. but if you’re an accountant do you have any ideas that not many people know of? 1. stamp duty land tax: is a tax paid when buying property or land 2. capital gains tax: is a tax on the profit made from selling an investment property. 3. corporation tax: if using a limited company you pay corporation tax on your profits from rental income and property sales. to view or add a comment, sign in 1031 exchange ever heard of a 1031 exchange? it’s a smart way for real estate investors to save on taxes when selling a property. let’s break it down with an example: meet donald & kamala:  > they owned a rental property that had gone up in value over the years.  > they wanted to sell it and buy a larger property for more rental income.  > but they didn’t want to pay a big capital gains tax bill. what they did:  > sold their property: instead of cashing out, they used a 1031 exchange.  > reinvested the proceeds: they bought a bigger rental property with the money from the sale.  > deferred taxes: by doing this, they didn’t have to pay capital gains taxes right away. how it works:  > they had to identify the new property within 45 days.  > they had to close on the new property within 180 days.  > this strategy let them grow their investment without the immediate tax hit. now, donald and kamala are enjoying more rental income, and those capital gains taxes? they’ve been deferred, all thanks to the 1031 exchange. if you’re thinking of upgrading your investment property, this could be a great move for you! ❤️ like this post and 💾 save for future reference. share with anyone you know who might benefit from this info. #realestateinvesting #1031exchange #propertyinvestment #taxstrategy #rentalincome #wealthbuilding #investmentproperty to view or add a comment, sign in berkshire hathaway homeservices california properties how a two year installment sale strategy can save on taxes when selling property or another substantially appreciated asset, you could spread the taxes over two years to save big bucks. following the rules is critical, though. https://lnkd.in/dv5vs9 w to view or add a comment, sign in realtor at oakwyn | sharing insights about presales, market updates & changes in your community with the updated provincial flipping tax rules, i’ve been getting more questions about the pros and cons of presales. when the rule was first implemented, it was suspected that you would have to hold the property for 2 years after completion of the development. now, as long as you hold the property for 2 years from the date you sign the presale contract, you can sell the contract or property without paying the 20% provincial tax on profit generated from the sale. you would also be free and clear from the federal flipping tax and would only be subject to capital gains tax on your profit. if you’re considering a presale or want more details on presale developments, get in touch. #presale #bcrealestate #flippingtax to view or add a comment, sign in property tax consultants working with property investors/developers to ensure they pay no more tax than they are legally required to. landlord concerns grow over potential capital gains tax changes before the election we reported that research by finbrie (a finance broker based in bournemouth) suggested 45% of landlords were concerned about the impact of capital gains tax (cgt) on their investments. 16 months ago the annual cgt tax free allowance was £12,300; today it is £3,000. yes the rate for higher rate payers was cut to 24% [from 28%] but this fooled only a few into believing the situation had improved. other tax changes of recent years, s24, stamp duty land tax and significantly higher borrowing rates have had a significant impact on profitability for landlords and investors. at property tax 360 we have been actively helping landlords to re structure their portfolios in a more profitable and often, compliant way; negating the impact of s24, returning investors to the ranks of basic rate tax payers, removing the spectre of historical capital gains and securing the lifetimes work   the legacy. your legacy. if the continuing challenges are causing you to consider what was unthinkable a few years ago then it really is time that you take steps. the solution to your anxieties already exists   you just need to book a discovery call at propertytax360.co.uk. the new government is unlikely to be any kinder to the prs than the last administration. take that first step today. to view or add a comment, sign in 455 followers 1031 exchange ever heard of a 1031 exchange? it’s a smart way for real estate investors to save on taxes when selling a property. let’s break it down with an example: meet donald & kamala:  > they owned a rental property that had gone up in value over the years.  > they wanted to sell it and buy a larger property for more rental income.  > but they didn’t want to pay a big capital gains tax bill. what they did:  > sold their property: instead of cashing out, they used a 1031 exchange.  > reinvested the proceeds: they bought a bigger rental property with the money from the sale.  > deferred taxes: by doing this, they didn’t have to pay capital gains taxes right away. how it works:  > they had to identify the new property within 45 days.  > they had to close on the new property within 180 days.  > this strategy let them grow their investment without the immediate tax hit. now, donald and kamala are enjoying more rental income, and those capital gains taxes? they’ve been deferred, all thanks to the 1031 exchange. if you’re thinking of upgrading your investment property, this could be a great move for you! ❤️ like this post and 💾 save for future reference. share with anyone you know who might benefit from this info. #realestateinvesting #1031exchange #propertyinvestment #taxstrategy #rentalincome #wealthbuilding #investmentproperty to view or add a comment, sign in i help real estate investors buy tax deed/lien at 50 90% off or earn 8 36% interest from the counties/cities in us. let me show you how to win your first deal in 30 days!🚀 🏡💎🔥texas tax deed auction coming up‼️ texas is one of the best states offering redeemable deed! let’s discuss some of the benefits of investing in texas and check out an upcoming auction! join us tonight, nov 17 on clubhouse at 6 pm est! join us through this link: https://lnkd.in/epbcyxj7 #freetaxdeedclass #freeclass #taxlienvesting #taxdeeds #taxdeedinvesting #taxdeedinvestingforbeginners #realestateinvestors #realestateinvestments to view or add a comment, sign in 99 followers tax implications of buying a house before selling uk click to: https://lnkd.in/ec75_ayz buying a house before selling an existing property in the uk can have significant tax implications. understanding these implications is crucial to avoid unexpected costs and to ensure compliance with tax regulations. this detailed guide will cover the various tax aspects associated with such transactions, including stamp duty land tax (sdlt), capital gains tax (cgt), implications for first time buyers, and other related considerations. #tax #sellto #webuyanyhouse #sellhousefast #quickhomebuyers #sellhousequickly #property #realestate #sell #selling #housebuying to view or add a comment, sign in 1,037 followers create your free account or sign in to continue your search or by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. new to linkedin? join now or new to linkedin? join now by clicking continue to join or sign in, you agree to linkedin’s user agreement, privacy policy, and cookie policy. linkedin never miss a beat on the app don’t have the app? get it in the microsoft store.
supported by ask real estate flip taxes, also known as transfer fees, help co op buildings raise money for repairs and improvements, and they must be described in your governing documents. by jill terreri ramos q: a month before i sold my upper manhattan co op, i discovered that i would have to pay a flip tax of 2 percent of the sale price at the closing. it’s a significant amount! when my wife and i bought the apartment in 2013, the seller paid $20 per co op share for the flip tax. i asked the co op board for evidence that they have the right to collect this tax. the board sent me documents about how the co op operates, which included nothing about the flip tax. are they allowed by law to demand this tax? can i fight it? a: flip taxes   also known as transfer fees   help co op buildings raise money for repairs and capital improvements, and they must be described in your governing documents. if the terms of the flip taxes in your building changed at some point, you should have received written notice of a shareholder vote to make that change. that’s because amendments regarding the flip tax usually cannot be made unilaterally by a co op board. “unless the language of the proprietary lease gives the board the discretion to raise the flip tax from time to time, which is atypical, the flip tax can only be increased through an amendment of the proprietary lease, which generally requires the approval of tenant shareholders owning two thirds of the co op’s shares,” said scott s. greenspun, principal with braverman greenspun, in manhattan. if you can’t recall such a vote, look in your governing documents, including your proprietary lease and your bylaws, for language authorizing the change. the terms are usually included in a section of the lease that contains rules governing how shares can be sold. if the tax isn’t expressly permitted in the lease, the board cannot prevent you from selling your shares if you don’t pay it, mr. greenspun said. co op shareholders who have faced improperly implemented flip taxes have been successful in court. “you may have grounds to challenge its validity in court after closing,” said ruta behrend, a partner who practices real estate law at tane, waterman, & wurtzel, p.c., in manhattan. you could seek a refund of the flip tax if it wasn’t legitimately adopted. your lease may also allow you to recoup the legal fees you incur if you are successful in challenging the flip tax in court, ms. behrend said. for weekly email updates on residential real estate news, sign up here.

