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.
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Related Topics & Key Terms
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