Can You Profit from Selling an HDFC?
If you own an HDFC co-op in New York City, you may be asking an important question:
Can I actually make a profit when I sell?
The short answer is YES — but the outcome depends on several building-specific and regulatory factors. A clear understanding of how HDFCs function is essential for setting realistic expectations, reducing risk, and maximizing your eventual resale value.
What Is an HDFC and How Does It Affect Resale?
HDFC (Housing Development Fund Corporation) co-ops were created by New York City to preserve long-term affordability in residential buildings. In exchange for tax benefits and other subsidies, many HDFCs agree to certain restrictions, including:
Income limits for buyers
Resale price caps
Approval requirements tied to regulatory agreements
Because of these limitations, HDFC apartments typically trade below market rate compared to similar non-restricted units in the same neighborhood. A smaller buyer pool helps maintain affordability — but it also directly influences resale value and liquidity.
How Flip Taxes Affect Profitability
Many co-ops impose a flip tax, and HDFCs are no exception. In fact, flip taxes in HDFCs are often higher than in conventional co-ops because they serve as a key revenue source for the corporation.
Flip taxes are not inherently bad, but they must be clearly understood. Any seller should know:
What is the flip tax amount?
Is it a fixed fee or a percentage?
Is it based on sale price or profit?
Are broker fees and closing costs excluded?
Are documented capital improvements excluded?
The answers to these questions can materially affect your net proceeds and should be reviewed well before listing.
Do All HDFCs Have Price Caps?
NO. HDFCs vary widely in how restrictive they are.
Some buildings have strict resale caps and rarely reach the open market, instead transferring internally within a community network. Others function more like traditional co-ops with income-restricted buyers but market-responsive pricing.
Several factors influence how an HDFC can be sold, including:
The year the building became an HDFC
The original sponsoring organization
Whether the regulatory agreement is still in effect
How buyer income limits are calculated
How strictly those income limits are enforced
Because these variables differ from building to building, two HDFCs on the same block can have dramatically different resale outcomes.
Why Many HDFC Sellers Still Walk Away With Profit
Despite restrictions, many HDFC shareholders do achieve meaningful appreciation.
NYC neighborhood values have often risen faster than the regulatory frameworks governing HDFCs. In some buildings, income limits are determined by formulas where purchase price is an input variable. As prices rise over successive sales, allowable buyer incomes can increase significantly — expanding the buyer pool and supporting higher resale prices.
For example:
If an original shareholder purchased for a nominal amount and a later buyer purchased for $350,000, the next buyer’s income eligibility may be materially higher than in previous cycles. These inflection points can accelerate value growth quickly.
That said, HDFC ownership prioritizes affordability over speculation. While profit is possible, returns are typically more modest than in market-rate co-ops or condos. Smart sellers anchor expectations in their building’s governing documents and current market dynamics.
The Bottom Line
Yes, you can profit from selling an HDFC in NYC. Many sellers do. But it is fundamentally different from selling a market-rate property.
Your outcome depends on the structure of your building’s income limits, resale rules, flip tax, and regulatory framework. Sellers who take the time to review governing documents, understand the HDFC landscape, and work with a broker who specializes in this niche are best positioned to protect value and maximize proceeds.