The building taxes
your exit
A flip tax is a private transfer fee the building collects when you sell — most often in co-ops, occasionally in condos. It is knowable to the dollar before you buy, and most buyers never ask.
Before you read on
- General information as of August 2026. The building's governing documents state the fee precisely.
- Not legal advice; your attorney confirms the figure during diligence.
- Check it before contract — Section 3 shows the return impact.
Point 1What it is and why buildings levy it
Despite the name, a flip tax is not a government tax: it is a fee to the building, authorized by its documents, collected at closing when shares or units transfer. Co-ops adopted them widely as a way to fund reserves from departing shareholders rather than monthly maintenance — sellers leaving with a gain contribute a slice on the way out.
For the building it is a healthy structure: reserves grow without raising carrying costs. For the individual seller it is simply a cost, and for a buyer it is a future cost that belongs in today's underwriting.
Point 2The common structures
Two buildings with identical maintenance can have flip taxes of zero and 3%. On a $2 million sale that is a $60,000 difference in exit proceeds — larger than most negotiating wins on the way in.
| Structure | Typical form | Note |
|---|---|---|
| Percentage of price | 1% – 3% of gross sale price | The most common form |
| Percentage of profit | Share of gain over your basis | Rewards long holders; paperwork-heavy |
| Per share | Fixed dollars per co-op share | Old-style; favors large units |
| Flat fee | Fixed dollars per sale | Rare; trivial in high-price buildings |
Who pays is also set by the documents — usually the seller, but buyer-pays buildings exist.
Point 3What it does to your return
A 2% flip tax lowers annualized return more on short holds than long ones: spread over three years it costs roughly two-thirds of a point per year; over fifteen years it fades toward noise. Buyers with shorter horizons should weight it accordingly — the fee is a friction on precisely the strategy that needs low friction.
It also stacks with everything else at exit: transfer taxes, brokerage, FIRPTA withholding for non-resident sellers. Model the full exit stack once at purchase and the sale-day arithmetic never surprises you.
Point 4Checking it, and changing it
The figure lives in the proprietary lease, bylaws or house rules, and any amendment adopting it; managing agents quote it on request and your attorney confirms it in diligence. Ask one question — "what is the flip tax and who pays it" — before falling for any co-op.
Buildings occasionally adopt or raise flip taxes by shareholder vote, which is why minutes matter: a building debating a new 2% fee is telling you about your exit in advance. Owners get a vote; buyers get a warning.
No — it is a private transfer fee paid to the building under its governing documents, on top of the government transfer taxes a sale already incurs.
Usually the seller, but the documents decide, and buyer-pays buildings exist. Confirm both the rate and the payer before contract.
Commonly 1-3% of sale price in co-ops that levy one; profit-based and per-share structures also exist. Zero is common too — many buildings have none.
Some do, via transfer or capital-contribution fees, though the structure is more associated with co-ops. Check the condo documents for transfer fees either way.
Yes, by the amendment process in its documents — typically a shareholder vote. Board minutes reveal whether one is being discussed.
It should: a building with a 3% exit fee is worth measurably less to you than an identical one with none, especially on shorter horizons. Price it in at purchase.
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Important notice
The figures on this page are general information as of August 2026 and do not represent an offer, a quote, or a guarantee of any transaction terms. Reinvent NY does not provide legal, tax, or investment advice. Confirm anything material with an attorney and a CPA before you act on it. Nothing here is a solicitation to invest, and no return is promised. Real estate brokerage services are provided through R New York.