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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!
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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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