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Flip Taxes Increase Looms

At a meeting on November 21, our Board rejected proposals to increase flip-taxes. It is likely that the decision not to go along with that plan was influenced by the strong views expressed at the Informational Meeting (see details of that meeting here). At a later meeting, a scaled-down variation of the original plan took effect in which Flip-Tax on first-sales was raised to 17½%, and the provisions for insiders to have a lower Flip-Tax rate was discontinued.


People in our community have been buzzing about increases in the flip tax imposed when apartments are sold. Great concern has been expressed that this will be damaging to our co-op, that our board members are not acting in our interests, and that our board members are considering this issue in secret without any dialogue with shareholders. I am not in a position to do financial analysis at present, but I can certainly present the information that comes to me. A flyer distributed recently and reproduced below puts the anti-flip tax increase positions into perspective. I invite people with opposing views — Board Members in particular — to present their thoughts.

SEE WHAT YOUR NEIGHBORS ARE SAYING AND ADD YOUR VIEWS!

 




 
 

Tell our Board of Directors:

Don't Raise Flip Taxes!

The Board of Directors is currently considering a plan to raise flip taxes on both first and second sales. This action, if taken, would be destructive and foolish. Raising flip taxes on first and second sales will not raise any money. On the contrary, it will lower the value of every apartment in Seward Park.

  • The value of every apartment will go down, whether the shareholder is here from before or after reconstitution. A raise in flip taxes on second sales will lower the price of every apartment on the market. Buyers will start looking elsewhere. Prices will fall. No money will be raised for the co-op. Apartments will be worth less.
  • Raising flip taxes on second sales is corporate theft. Shareholders who purchased after reconstitution did so with full knowledge of a 5% flip tax on their future sale. Subjecting them to an additional flip tax would diminish their equity without their consent.
  • Shareholders who’ve been living here since before reconstitution will effectively be taxed twice. Flip taxes on their sale would be increased and their sale would fetch less money.
  • Buyers will find it more difficult to get mortgages. Already many banks blanch at our high flip taxes. Raising them again, would make it even more difficult to find lenders. Buyers will be discouraged.
  • Buyers will not be able to trust that flip taxes will not go up again. Knowing that the board recently raised flip taxes will make it seem like they don't keep their promises and that flip taxes are likely to go up again.
  • Our flip taxes are already the highest in the city. Most co-ops have no flip tax or a tax of around 1-3%. Flip taxes on second sales have not gone up elsewhere in co-op village. Buyers will simply shop elsewhere and prices will fall.
  • The Board has done no analysis. The board has not done a single study to show that raising flip taxes will bring in revenue. They are acting out of fear and ignorance.
  • It won't work. The idea of raising flip taxes as a way of coming up with revenue is based on the faulty premise that prices for apartments will not be affected. Prices will go down. Thus, no more money will be raised. In fact, less funds might come in, which might necessitate an increase in our monthly maintenance.

Let the board know you are opposed to this foolish idea. The value of your apartment and the future of our co-op are at stake!

[Unsigned]





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