Ackerman Cites Role Protecting Co-op, Condo Owners' Ability to Collect Flip Tax
U.S. Rep. Gary Ackerman (D-L.I./Queens) claimed victory in his efforts to protect co-op and condo owners on Long Island and Queens, all of whom were under threat from a proposed federal rule that would have had devastating effects on their properties.
The proposed regulation, put forward last August by the Federal Housing Financing Agency (FHFA), would have prohibited government-sponsored enterprises, such as Fannie Mae and Freddie Mac, from purchasing mortgages that contain a private-transfer fee, including co-ops and condos with flip taxes.
However, after a drive spearheaded by Ackerman and a letter he sent to the head of FHFA this past October blasting the flip tax proposal, the agency has reversed its position, and issued a new proposed rule that would exclude mortgages on properties that have flip taxes paid to co-ops, homeowner associations and condos from their restriction of private-transfer fees.
“This is terrific news for co-op and condo owners,” said Ackerman. “I am extremely pleased that we were able to convince FHFA to change its misguided proposal. Had the agency moved forward with this regulation, condos and co-ops would have been forced to eliminate flip taxes and desperately seek other streams of revenue. I thank FHFA for listening to our concerns on this critical issue, and for realizing how devastating this proposed rule would have been to hard working New Yorkers who own condos and co-ops.”
A flip tax is a transfer fee paid to a condo or co-op when a unit is sold. The tax, usually paid by the seller, is used maintain and improve the property.
Under the revised proposal, fees that are used to directly benefit properties are excluded from the proposed regulation. The regulation would generally define a direct benefit as including maintenance, improvements and amenities that improve a property.
The new rule must be formally approved by FHFA later this year. The agency must also conduct a mandatory 60-day comment period which is expected to begin on or about February 7th.
