Comments on: I Have Found a More Wretched Hive!

By: Silas

Silas — Fri, 23 May 2008 19:37:16 +0000

Kip: it's not black and white. Yes, flippers create liquidity. However, co-ops probably want to fill their units with people who have a long-term stake in the future of the co-op, NOT people who will be gone soon. I thought this was just basic co-op reasoning.

If people value the latter benefit more than the former (or the latter benefit contributes more to the price of the units than the former), they would be happy to tax flippers.

By: Silas

Silas — Thu, 22 May 2008 19:26:14 +0000

Isn't the justification for the flip tax kind of evident from the name? That you want to penalize people who buy condos just to speculate and then "flip" to someone else, rather than be a pleasant member -- and then pocket the penalty money for all the legitimate members?

I'd be genuinely surprised if no one actually made that argument :-/

I'm assuming, of course, that a flip tax has some sort of exemptions that focus it in the way I've described above: e.g. doesn't apply if you actually inhabit the unit for a year, not retroactive to existing members, etc. But even without such exemptions, it will still have the function I described: a tax on a sale of a unit is inherently less burdensome to someone who has to figure its impact as a cost of living their 10 years vs. someone merely holding it 3 months.

How detached from reality am I here? ;-)

[Kip replies: How does living in a unit for a shorter time generate externalities to those who live in a unit for a longer time? If anything, the externalities are positive rather than negative, since the flipper provides liquidity to what is an inherently illiquid market.]

By: J-Philip

J-Philip — Wed, 21 May 2008 06:36:43 +0000

I believe Kip's Law applies here, in a microcosm.

By: Avatar300

Avatar300 — Tue, 20 May 2008 15:53:54 +0000

Run, Kip, run. Or possibly: This isn't the sales tax you're looking for…

By: Mark

Mark — Tue, 20 May 2008 15:15:06 +0000

There is nothing that more closely approximates communist totalitarianism than a co-op or condo association. When I lived in a condo complex in VA, one of the favorite practices was citing people for daring to store their bicycles on their porch…never mind that it was only possible to see what was on someone's porch if you leaned over the edge of the stairwell in the breezeway AND were at least one story above the "violating" condo.