Introduction

A New York State proposal to tax house flippers is back before lawmakers, reviving a debate over whether short-term real estate speculation drives up home prices in working-class neighborhoods—or whether taxing it is government overreach into a market that depends on private investment to renovate aging housing stock.

The End Predatory Home Flipping Act, carried in the State Senate as S574A and in the Assembly as A342, would place a steep transfer tax on one-to-three-unit homes in New York City that are bought and resold within two years. The bill has been reintroduced across multiple legislative sessions and continues to draw support from housing advocates and opposition from real estate and homeowner groups.

Background

The legislation is sponsored by State Senator Julia Salazar of Brooklyn, with a companion Assembly version carried by Queens Assemblymember Catalina Cruz. A version of the measure was first introduced in 2021 after residents in East New York and Cypress Hills reported a wave of investor purchases in their neighborhoods. The current proposal would amend New York City’s administrative code, meaning it applies to properties within the five boroughs rather than statewide.

In simple terms: “flipping” describes buying a home at a low price, making improvements, and reselling it relatively quickly for a profit.

The bill’s justification leans heavily on a November 2024 report from the Pratt Center for Community Development titled “Flipping Out: How Home Flipping Reduces Affordability in NYC Neighborhoods of Color.” That report found that flipping activity was concentrated in lower-value community districts, and that the ten districts with the highest flipping rates were each more than 90% people of color.

How the Policy Would Work

The proposed tax is structured to discourage rapid resales. If a qualifying property is resold within one year of purchase, the bill imposes a tax equal to 65% of the difference between the purchase price and the resale price. If the resale occurs after one year but within two years, the rate drops to 50%.

A critical detail is the tax base: the levy applies to the difference between the two sale prices, not to the seller’s net profit after renovation costs.

The bill carves out several exemptions. Transfers to family members, sales of newly constructed housing, conveyances following an owner’s death, sales by owners who can demonstrate financial hardship, and resales priced no more than 10% above the prior purchase price would all be exempt. Foreclosure-related transfers are also excluded.

Examples

Consider a property purchased for $400,000 and resold within ten months for $750,000. Under the bill, the $350,000 price difference would trigger a 65% tax—roughly $227,500—paid on top of existing New York State and New York City transfer taxes.

The structure has drawn pointed criticism because it taxes the price gap rather than profit. The Real Deal illustrated the concern with a scenario in which an investor buys a fixer-upper for $500,000, spends $500,000 on renovations, and sells within a year for $1 million. The investor’s actual profit is zero, but the bill would still generate a tax of roughly $325,000 on the price difference.

Impact on the Housing Market

The central affordability argument is that flippers compete for the same modestly priced homes that first-time buyers seek, then return them to the market at prices many local buyers cannot match.

The Pratt Center found that the median price paid by home flippers in 2021 was nearly 50% below the citywide median home value, and that flipped homes consistently sold at a higher price per square foot than non-flipped properties between 2019 and 2023. The Center for NYC Neighborhoods reported that flippers acquired homes for 20% to 50% less than comparable nearby properties—a pattern advocates say signals that flipping increases demand for scarce affordable homes and reduces the supply available to owner-occupants.

The Pratt analysis also linked flipping to housing instability, reporting that the eviction rate among flipped one-to-three-unit homes, co-ops, and condos was roughly six times higher than among comparable non-flipped properties.

How Flipping Affects Comparable Sales (Comps)

The mechanism advocates point to runs through appraisals. Home values are largely set by “comps”—recent sales of similar nearby properties that appraisers use to estimate market value.

In simple terms: when a renovated home sells for a high price, that sale becomes a data point appraisers and other sellers reference, which can lift the assessed value of surrounding homes.

The effect is double-edged. Higher comps can raise property tax assessments for existing owners and push up asking prices across a block, which advocates say accelerates displacement and rent increases in unregulated units. Industry sources counter that appraisers act as a natural ceiling: a single renovated sale rarely lifts an entire area on its own, because appraisers generally will not value a home far above established neighborhood comparables. Federal anti-flipping guidance issued by HUD in 2004 and amended in 2006 likewise restricted FHA-insured financing on properties resold within 90 days, reflecting longstanding scrutiny of rapid-resale valuations.

The Broader Economic Footprint

Beyond its effect on prices, the proposal touches an economic chain that extends well past the buyer and seller. House flipping supports a network of lenders, investors, contractors, and material suppliers, and a steep transfer tax could reshape activity for each.

The scale is significant. According to ATTOM Data Solutions, roughly 68,000 homes were flipped in a single quarter of 2024—about one in every twelve homes sold nationally. ATTOM also reports that renovation costs typically run between 20% and 33% of a property’s after-repair value, meaning each project channels tens of thousands of dollars into labor and materials.

Rehab lenders. Many flips are financed through short-term “fix-and-flip” or hard-money loans rather than conventional mortgages. Private lenders such as RCN Capital and Groundfloor specialize in this space, typically charging interest rates in the 8% to 15% range on 12-to-24-month terms, with funds released in stages against inspection-verified renovation progress. In simple terms: these lenders bet on the property’s projected after-repair value rather than the borrower’s long-term income, which is why conventional banks generally avoid the category. A tax that sharply reduces resale margins could shrink loan demand and the deal volume these lenders depend on.

Investors. Flippers absorb the upfront risk of acquiring and rehabilitating distressed properties. ATTOM data shows gross returns historically exceeding 30% per home, though industry analyses note that margins have compressed nationally as acquisition prices and carrying costs have risen. Because the proposed tax applies to the price difference rather than net profit, critics argue it would fall hardest on investors taking on the most extensive—and most needed—renovations.

Contractors and the trades. Each renovation employs general contractors, electricians, plumbers, and other tradespeople, and draws on locally sourced materials. Industry lenders point out that this spending circulates through the local economy and sustains small construction businesses. A reduction in flipping activity would directly reduce that work pipeline.

Neighborhood improvement. Supporters of the practice argue that flippers return deteriorated, vacant, or code-deficient properties to usable condition—housing that might otherwise sit unsold or decline further. Roughly 11% of flipped homes nationally are purchased by FHA buyers, a common proxy for first-time and owner-occupant purchasers, suggesting that a portion of renovated inventory does reach individual homeowners rather than other investors.

The counterargument from the bill’s supporters is that this economic activity does not justify the displacement they attribute to speculation, and that the same renovation work could occur on a slower timeline that does not destabilize prices. The Pratt Center and allied groups contend the affordability cost to existing residents outweighs the short-term economic stimulus, particularly when renovations are cosmetic rather than structural.

A National Pattern: How Other States and Washington Are Responding

New York’s proposal is part of a broader national wave of legislation aimed at short-term real estate speculation and investor purchases of homes—though the approaches differ significantly in design.

The closest parallel is California’s Assembly Bill 1771, the California Housing Speculation Act, introduced in 2022 by Assemblymember Chris Ward. It proposed an additional 25% tax on the net capital gain from residential property sold within three years of purchase, with the surcharge phasing down annually until it disappeared after seven years. Revenue would have flowed into a Speculation Recapture Community Reinvestment Fund earmarked for affordable housing, schools, and local infrastructure.

A key design difference sets the two states apart. California’s bill taxed net capital gain—profit after costs—while New York’s measure taxes the gross difference between the purchase and sale prices. In simple terms: a tax on profit spares an investor who breaks even after expensive renovations, whereas a tax on the price gap does not. Even so, AB 1771 drew similar criticism for lacking a carve-out for fix-and-flip rehabbers, and it stalled in the Assembly Committee on Revenue and Taxation without becoming law, opposed by the California Association of Realtors and the American Association of Private Lenders. Committee members from both parties questioned whether it would meaningfully expand housing supply.

A second, distinct approach targets large institutional investors rather than individual flippers. At the federal level, the Stop Predatory Investing Act—reintroduced in 2025 as the HOMES Act—would deny mortgage-interest and depreciation deductions to investors owning 50 or more single-family rental homes. In March 2026, the U.S. Senate passed the broader 21st Century ROAD to Housing Act by a vote of 89 to 10; the bipartisan measure includes a provision restricting large institutional investors—those controlling 350 or more single-family homes—from buying additional ones. The Trump administration issued a related executive order in January 2026 directing the Treasury Department to develop rules limiting such purchases.

These federal efforts focus on corporate buy-and-hold landlords, a different target than the short-term flipper New York’s bill addresses. Analysts note that institutional investors own a relatively small share—roughly 3% to 4%—of single-family rentals nationally, though their concentration is higher in specific metropolitan markets.

The contrast between flip taxes aimed at quick resales and ownership limits aimed at large portfolios illustrates that policymakers have not converged on a single tool for the same underlying concern: that investors are competing with families for a limited supply of affordable homes.

Analysis: Leveling the Field or Government Overreach?

Supporters frame the bill as an effort to level the playing field. They argue everyday buyers cannot compete with cash-backed investors for limited affordable inventory, and that a tax disincentive would steer those homes toward owner-occupants. A coalition including the Association for Neighborhood and Housing Development, the Center for NYC Neighborhoods, and the Pratt Center backs the measure, and the New York City Council has passed a resolution urging the state to enact it.

Opponents counter that the proposal is a costly intervention that would not produce affordable housing. The New York State Association of Realtors, citing a median city home price of roughly $690,000 in an earlier analysis, warned that a punitive flip tax could add six figures in transfer costs to a single sale, deter investment in aging properties, and shrink an already limited housing stock. The group noted that real estate–related taxes have historically supplied more than half of New York City’s tax revenue, and argued the measure penalizes a narrow group of transactions without creating new units.

A second line of criticism focuses on design rather than intent: because the tax applies to the price difference instead of net profit, critics say it could penalize investors who undertake genuine, expensive renovations just as heavily as those who make only cosmetic changes—the very “predatory” behavior the bill names. Supporters respond that the two-year window and hardship exemptions are meant to target speculation rather than legitimate rehabilitation, and that the threat of displacement justifies a strong deterrent.

Whether the bill represents a reasonable correction to speculative pressure or an overreach into private property transactions depends largely on how one weighs two competing goals: expanding access for first-time buyers, and preserving the private investment that brings deteriorated housing back into use.

Conclusion

The End Predatory Home Flipping Act sits at the intersection of two priorities that are difficult to reconcile—affordability for first-time buyers and the flow of private capital into housing rehabilitation. Its sponsors have reintroduced it repeatedly without final passage, and its fate in future sessions will likely hinge on whether lawmakers conclude that a steep, transaction-based tax is the right instrument for a problem rooted in scarce supply. For now, the proposal remains a live test of how far government should go in shaping who profits from the resale of a home.

Key Takeaways

• The End Predatory Home Flipping Act (S574A/A342), sponsored by Sen. Julia Salazar and Assemblymember Catalina Cruz, would tax quick resales of one-to-three-unit homes within New York City.
• The tax would equal 65% of the price difference for resales within one year and 50% within two years, with exemptions for family transfers, new construction, hardship, death, and resales priced 10% or less above purchase.
• The tax applies to the gap between purchase and sale prices, not net profit—a design critics say could penalize substantial renovations.
• Pratt Center research found flippers paid about 50% below the citywide median in 2021 and that flipped homes sold at higher prices per square foot, fueling the affordability argument.
• Opponents, including the New York State Association of Realtors, warn the tax could shrink housing supply, raise closing costs, and fail to create affordable units.
• Flipping supports a broader economic chain—rehab lenders, investors, contractors, and material suppliers—with ATTOM reporting roughly 68,000 flips in one quarter of 2024 and rehab costs of 20%–33% of after-repair value per project.
• New York is not alone: California’s AB 1771 proposed a 25% speculation surtax (on profit, not the price gap) before stalling, while federal bills like the HOMES Act and the Senate-passed 21st Century ROAD to Housing Act target large institutional investors rather than individual flippers.

Sources

• New York State Senate, Bill S574A, “End Predatory Home Flipping Act” — nysenate.gov
• New York State Assembly, Bill A342 (companion) — nysenate.gov
• Pratt Center for Community Development, “Flipping Out: How Home Flipping Reduces Affordability in NYC Neighborhoods of Color,” November 2024 — prattcenter.net
• Center for NYC Neighborhoods, home flipping purchase-price analysis
• New York City Council, Resolution urging passage of A.342/S.574 — council.nyc.gov
• Brick Underground, “New state legislation would tax ‘predatory’ home flippers in NYC,” May 2026
• The Real Deal, “New York Bill Targets House Flippers With Punitive Tax,” May 2026
• New York State Association of Realtors, Memorandum in Opposition — nysar.com
• U.S. Department of Housing and Urban Development, FHA anti-flipping guidance (2004, amended 2006)
• ATTOM Data Solutions, U.S. Home Flipping Report (2024 quarterly data, rehab cost and gross return figures)
• Fix-and-flip lending terms and market trends: RCN Capital, Groundfloor, and 2025 industry financing analyses
• HousingWire, “Professional fix-and-flip market poised for growth in 2025”
• California Assembly Bill 1771, “The California Housing Speculation Act” (2021–2022 session) — leginfo.legislature.ca.gov
• American Association of Private Lenders and Fortra Law, analyses of AB 1771’s impact on fix-and-flip investors
• Stop Predatory Investing Act / HOMES Act (S.969, 119th Congress) — congress.gov
• 21st Century ROAD to Housing Act (H.R. 6644), Senate passage March 12, 2026; Mayer Brown and Davis Polk legal analyses