Cohousing-L Mailing List: Re: flip tax

[Dave and Diane (daveanddee]

Hi Jerry and all the folks in cohousing-land,
Here is the actual language from the Master Deed. It does not say 
anything about improvements, it just talks about appreciation. The 
appreciation is tied to the cost-of-living index in case of inflation. 
The appreciation has to be greater than 20% after a broker's fee is is 
deducted. In addition, the transfer fee is only 1%. In my opinion, it 
waters down the fee to the point where it is mostly a symbolic gesture.
--Diane(:^|

outreach facilitator
jp cohousing  617-522-2209
Box 300420 boston ma
http://www.jpcohousing.org
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"The people who surround you define the quality of your life."


17.	Transfer Fee.	Upon the sale or other transfer of a Unit for 
consideration (“sale”), other than a sale by a foreclosing lender or an 
exchange of Units by current Unit Owners, the Selling Unit Owner shall 
pay to the Association a Transfer Fee equal to one (1%) percent of the 
sale price of the Unit, provided, however, that in the case of any 
shared appreciation arrangement with the Association, there shall be 
excluded from the principal amount on which the Transfer Fee is  
payable, that portion of the appreciation payable to the Association, 
and provided further, that no such fee shall be payable unless the sale 
price of the Unit, after allowance for a reasonable broker’s fee, as 
reflected on the HUD Settlement Statement for the transaction, shall 
exceed by twenty (20%) percent or more the “Adjusted Purchse Price”, as 
defined herein.  The Adjusted Purchse Price shall be the consideration 
stated in the original Unit Deed into the Unit Owner adjusted by the 
percentage increase in the “Consumer Price Index – All Urban Consumers, 
All Items” for the Boston Metropolitan Area, published by the U.S. 
Bureau of Labor Statistics (the “index”) or, in the event the index is 
no longer published, any comparable successor or substitute index 
designated by the Association.  The Adjusted Purchase Price shall be 
calculated by multiplying the original purchase price of the Unit by a 
fraction, the numerator of which shall be the most recent index 
published, which is at least thirty days before the closing of the 
sale, and the denominator of which shall be the index published 
immediately prior to the date of the recording of the original Unit 
Deed.  Upon collection of the Transfer Fee by the Association, the 
funds shall be deposited into the general operating account of the 
Association or such other accounts of the Association as the Assciation 
may from time to time designate consistent with its governing documents.

	The Transfer Fee, while not a common expense assessment within the 
meaning of Mass. G.L. c. 183A, may be enforced as a common expenses 
under said Chapter, and, in that same regard, duly accounted for on any 
certification issued by the Association pursuant to G/L/ c 183A Sec. 
6(d).  The acceptance of a Unit Deed by a Unit Owner shall constitute 
his/her agreement to the assessment, collection and use of the Transfer 
Fee in the manner described herein.

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On Wednesday, February 14, 2007, at 09:19:10, "jkgonzalez" 
<jerry [at] communicatingwithcompassion.org> wrote:

> I want to check my understanding of the transfer fee formula based on 
> the
> difference between purchase and sales price less improvements.
> If I bought the house for $135,000, put $65,000 of improvements on it 
> and
> sold it 12 years later for $300,000, then the formula:
> ($300,000 -$65,000)- $135,000 = $100,000 * 3% = $3000
> <snip>
> And a follow up question:
> What defines an improvement?
> How do you put a value on improvements?
>
> Jerry Koch-Gonzalez
> Pioneer Valley Cohousing Community, Amherst MA