In August 2023, shareholders at a 421-unit co-op complex on Clinton and Clark Streets voted to do something no Mitchell-Lama building in New York City had ever done: leave the program entirely and convert to a different kind of affordable co-op called an HDFC. Seventy-seven percent voted yes. The building was Cadman Towers, and the vote set off a chain of events that changed, permanently, what it costs a shareholder there to sell.
That story matters to you even if you don't live at Cadman Towers, because it proves something every Brooklyn Heights co-op seller needs to internalize before listing: the flip tax is not a neighborhood number. It is a building number, set apartment building by apartment building, and the gap between what one Brooklyn Heights co-op charges and what another charges can run from a modest line item to half your profit.
The Flip Tax Is a Formula, Not a Rate
A flip tax, despite the name, isn't a government tax at all. It's a transfer fee that a co-op's board writes into the proprietary lease or bylaws, charged when a unit changes hands, and the revenue goes to the building, not the city. Some co-ops charge a flat dollar amount. Some charge a percentage of the gross sale price. Some calculate it as a percentage of the seller's profit, meaning sale price minus original purchase price. A few charge per share.
Across most Brooklyn co-ops, that percentage typically lands between 1 and 2.5 percent of the sale price, a touch lower than what's common in Manhattan. That's the range most Brooklyn Heights sellers will encounter in an ordinary market-rate building. It's also the range that lulls people into treating the flip tax as background noise rather than a real number to plan around.
Run the math on an actual Brooklyn Heights sale price and it stops looking small. Prime listings in the neighborhood have recently priced above $1,500 per square foot, and a two-bedroom co-op selling around $2 million is not unusual for the area. At 1 to 2.5 percent, that single line item is $20,000 to $50,000 coming directly off net proceeds, before broker commission, before transfer taxes, before anything else at the closing table.
And that's the calm end of the spectrum.
What Cadman Towers Changed, and Why the Gap Is the Point
Cadman Towers has been part of the Mitchell-Lama program, the state's affordable co-op system, since 1973. By 2024 its two towers were carrying $62 million in debt with tens of millions more needed for repairs, and the board had been raising maintenance fees for years without solving the underlying problem. Leaving Mitchell-Lama for HDFC status gave the co-op a new source of revenue: the ability to capture a share of every future sale.
Under the plan the City Council approved in April 2024, the terms are specific. First-time sellers under the new structure give back 50 percent of their profit to the co-op. Every sale after that carries a straight 3 percent transfer fee. Board president Toba Potosky put the goal plainly.
"It's to make sure we're affordable for the next 50 years and beyond."
The scale of the shift is easy to see in the pricing itself. Under Mitchell-Lama rules, a one-bedroom at Cadman Towers went for around $45,000 and a three-bedroom for about $80,000, according to the building's property manager. When the co-op ran its first HDFC-era resale lottery in September 2025, offering 19 units through NYC Housing Connect, every apartment in the lottery was priced above $100,000.
Nobody is suggesting a market-rate co-op down the block will suddenly adopt Cadman's terms. The point is narrower and more useful: two buildings in the same neighborhood, sometimes on the same block, can have flip tax structures that aren't in the same universe. Here's what that spread actually looks like at closing.
| Building type | What the seller owes |
|---|---|
| Typical market-rate Brooklyn Heights co-op | 1% to 2.5% of sale price |
| Less common, higher-end co-op policy | up to 3% of sale price |
| Cadman Towers, first HDFC-era resale | 50% of profit returned to the co-op |
| Cadman Towers, every resale after that | 3% of sale price |
You will not find your building's row in that table by searching the neighborhood. You'll find it in your proprietary lease.
The Costs Stacking on Top
The flip tax never arrives alone. New York charges combined city and state transfer taxes that typically run 1.4 to 2.075 percent of the sale price for sellers, separate from anything the building collects. On top of that sits New York's mansion tax, which kicks in at a $1 million sale price. In a neighborhood where prime listings routinely clear that threshold, a growing share of Brooklyn Heights sellers are paying it without having budgeted for it early.
Add commission, legal fees, and building transfer fees together, and total seller closing costs in New York City typically fall between 8 and 10 percent of the sale price. The flip tax is usually the single most variable piece of that range, because unlike transfer taxes, it isn't set by the state. It's set by whoever sat on your co-op board the year the policy was adopted, and it can be changed by a two-thirds shareholder vote at any annual meeting.
Why the Median Price Won't Rescue You Here
It's tempting to treat a neighborhood's median sale price as a stand-in for what your building will do, the same instinct that makes people assume flip tax rates are uniform. The data argues against that instinct just as strongly.
In March 2026, the reported median sale price for a Brooklyn Heights home hit $2.7 million, a 91.8 percent jump from a year earlier. Only 39 homes sold that month. A different data provider's read on the neighborhood's co-op median for the second quarter of 2026 put it at $600,000, down 34.4 percent year over year. Both numbers are accurate. Neither tells you much on its own. With that few transactions changing hands in a given window, one or two closings at the high or low end of the market can swing the reported median further than any real shift in value, up or down.
The lesson runs in both directions. Just as the neighborhood-wide flip tax average tells you nothing about what your specific proprietary lease says, the neighborhood-wide median tells you nothing about what your specific apartment will sell for. Both numbers get set at the building level, sometimes at the individual line-item level, and both require you to go get the actual document rather than trust the headline.
Four Documents to Pull Before You Set a Price
- The proprietary lease. This is where most flip tax clauses live, spelled out as a flat fee, a percentage, or a per-share formula.
- The bylaws and house rules. Some boards write the flip tax here instead of, or in addition to, the proprietary lease.
- Recent board meeting minutes. A flip tax can be raised with a two-thirds shareholder vote. Minutes will show whether that conversation is already happening.
- Current audited financials and any reserve study. A building leaning hard on flip tax revenue to cover deferred maintenance, the way Cadman Towers was, is a building more likely to revisit its rate before you close.
Pull these four before you and your agent talk pricing strategy, not after an offer is already on the table.
Frequently Asked Questions
Does every Brooklyn Heights co-op charge a flip tax? No. Flip taxes are voluntary policies each board adopts and writes into its own governing documents. Some smaller or newer buildings never put one in place at all.
Who typically pays it, the buyer or the seller? Custom favors the seller in most New York co-ops, but the actual answer sits in your building's paperwork, and in a competitive listing it can become a point of negotiation at the closing table.
Can my board raise the flip tax before I sell? Yes. Most proprietary leases allow a rate change with a two-thirds shareholder vote, and a board facing real capital needs has genuine incentive to use that lever. Checking recent board minutes before you list is the only way to know if that conversation is already underway.
If you're weighing a sale in Brooklyn Heights and you don't yet know what your building's proprietary lease says about a flip tax, that's the first phone call worth making, not the last. The The Rosen Team reviews building financials, bylaws, and board minutes as a standard part of pricing any listing, so the number on your closing statement matches the number you planned for months earlier. Schedule a 10-minute introductory call and bring your building's documents. We'll tell you exactly what they say.
