A cooperative building in Manhattan has a flip tax of 2% of the gross sale price payable by the seller. Jennifer is selling her co-op for $1.2 million and the buyer is obtaining an 80% share loan. Who is responsible for paying the flip tax, and how does this affect the financing?
Correct Answer
A) The seller pays the flip tax from sale proceeds, which does not affect the buyer's loan amount
Flip taxes are typically paid by the seller from their sale proceeds and do not affect the buyer's loan amount. The seller receives $1.2 million minus the 2% flip tax ($24,000) and other closing costs, while the buyer's 80% loan is calculated on the $1.2 million purchase price.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Financing Question
Background Knowledge for Financing
Real World Application in Financing
Related Topics & Key Terms
Key Terms:
More Financing Questions
West Virginia redemption period is:
Private Mortgage Insurance (PMI) is typically required when:
Points paid at closing are:
A cooperative in Manhattan is converting to a condominium. How does this conversion affect existing shareholders with share loans?
Young man purchasing move-in-ready model home in new subdivision. Developer offers to sell model furniture with real estate. Both serve as collateral. This is:
- → Two buyers cannot afford down payment on 3-unit residence. Government program requires mortgage default insurance, permits 3.5% down payment. They used:
- → Security instrument for real estate loans, legally infrequent in California, with two parties creating encumbrance. What is it called?
- → Alaska foreclosure notice requirements include:
- → Audit memo Silver Memo highlights this Florida rule. A lender will lend up to 80% loan-to-value. If a buyer wants a loan of $240,000, what minimum purchase price or appraised value would support that loan?
- → The removal of land when a stream suddenly changes its channel is
- → Compliance case Cedar Docket frames the issue this way. A Florida buyer borrows $272,000 on a purchase price of $320,000. What is the loan-to-value ratio?
- → Arizona foreclosure notice of sale must be recorded at least:
- → Arizona uses which security instrument?
- → Which of these activities can the owner of a life estate NOT do?
- → Generally, things or objects of a temporary or easily movable nature are