New York City real estate attorney Natalia Sishodia releases a new article (https://sishodia.com/what-is-a-flip-tax/) explaining the purpose of a Flip Tax in New York. The lawyer explains that there has been a considerable shift from rental units to co-ops over the past 80 years. Recently, almost 75% of housing in NYC is co-op housing.
According to the New York City real estate attorney, “Cooperative housing, or co-ops, are corporations that own a building where the residents are shareholders of that corporation. Sales of units are not real property sales but transfers of shares of ownership in the building. The NYC co-op flip tax is a tax or transfer fee charged by a co-op association whenever a unit is transferred. This fee can be paid by a seller or a buyer, depending on the terms of the contract.”
The lawyer explains that flip taxes are a great way to raise funds for building expenses without increasing assessments. Co-ops are also more invested in unit ownership over the long term and more selective about unit owners.
Attorney Natalia Sishodia says that flip taxes could discourage people from buying units and turning them around for fast profits. New York's flip taxes vary from one building to the next. The flip taxes can be anywhere from one to three percent of the sale price.
The article states that an average NYC flat flip tax of 1% to 3.3% is charged by the NYC co-op. This fee is usually paid by the seller. Flip taxes cost varies depending on the building. A person might also be able to find condos with New York City transfer taxes. All closing costs for buyers include the broker commissions as well as the NYC & NYS transfer taxes.
“As with many negotiable real estate costs, who pays for the flip tax can vary with the market at any given time. When the market is a buyers’ market, and sales are slower, the seller will most often pay the flip tax. In a hot market, a flip tax may fall on the buyer as part of the terms of the sale. Anyone buying or selling a co-op in New York City should understand who is contractually obligated to pay the flip tax in the transaction,” says the real estate lawyer.
Lastly, the lawyer also stresses the importance of having an experienced lawyer when negotiating the purchase or sale of real estate, or in any other real estate transaction. An experienced lawyer can help clients understand their rights and ensure they get the best deal possible.
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