The Peconic Bay transfer tax is a 2% real estate transfer tax, formally called the Community Preservation Fund (CPF) tax, collected on property sales in five towns at the eastern end of Long Island. The buyer pays it, and it applies to the purchase price above a built-in exemption that varies by town and by whether the property is improved or vacant. The Suffolk County Clerk will not record the deed until the tax is paid, so it has to be handled at closing.1Suffolk County Clerk. Peconic Bay Region Community Preservation Fund Tax Form
Which Towns the Tax Applies To
Only five towns collect this tax: East Hampton, Riverhead, Shelter Island, Southampton, and Southold.2New York State Senate. New York Tax Law Article 31-D – Tax On Real Estate Transfers In Towns In the Peconic Bay Region No other Long Island town or village charges it. If your property sits inside one of these five towns, the tax is in play; if it doesn’t, it isn’t.
How Much You’ll Owe
The 2% rate does not apply to the full purchase price for residential sales at or below $2 million. Each town subtracts an exemption first, and the exemption depends on which town you’re in and whether the land has a building on it.3New York State Senate. New York Tax Code 1449-EE – Exemptions
East Hampton, Shelter Island, and Southampton
- Improved property (with a building): $400,000 exemption
- Vacant or unimproved land: $100,000 exemption
Buy a home in East Hampton for $1,000,000 and the 2% applies to $600,000, producing a tax of $12,000.
Riverhead and Southold
- Improved property: $200,000 exemption
- Vacant or unimproved land: $75,000 exemption
That same $1,000,000 home in Southold is taxed on $800,000, producing a tax of $16,000.3New York State Senate. New York Tax Code 1449-EE – Exemptions
The $2 Million Cliff
Above $2 million on a residential sale, the exemption disappears entirely and the 2% applies to the full purchase price. The jump is steep. A $1,900,000 home in Southampton gets the $400,000 exemption and owes 2% on $1,500,000, or $30,000. A $2,100,000 home in the same town gets no exemption and owes 2% on the full price, or $42,000. A $200,000 bump in sale price more than doubles the tax.3New York State Senate. New York Tax Code 1449-EE – Exemptions
Who Writes the Check
By statute the tax falls on the grantee, meaning the buyer. The Town of Southold’s official FAQ states it plainly: “The Peconic Bay Region Community Preservation Fund (2% real estate transfer tax) is paid by the grantee.” Hamptons purchase contracts often reallocate closing costs between the parties, so the economic obligation can shift if your agreement says so. If the contract is silent, the default is the buyer.
When You Don’t Owe the Tax
Section 1449-EE of the Tax Law lists a long roster of exempt transactions.3New York State Senate. New York Tax Code 1449-EE – Exemptions A handful come up repeatedly.
First-Time Homebuyers
First-time buyers purchasing a primary residence can qualify for a full exemption, but income and purchase price are capped using limits set by the State of New York Mortgage Agency (SONYMA). As of 2025, East Hampton and Southampton use an income cap of $197,880 and a purchase price ceiling of $1,883,880 (150% of SONYMA’s $1,255,920 limit for Suffolk County).4Town of East Hampton. Peconic Bay Region Community Preservation Fund – First-Time Homebuyer Exemption Form These figures update whenever SONYMA adjusts its program, so confirm the current numbers with the town before closing.
You have to apply in advance, typically at least a week before closing, by submitting an application and income documentation to the town. The signed approval needs to be in hand on the closing date.5Southampton Town, New York. First Time Homebuyer Application and Forms
Gifts and Family Transfers
Transfers made as genuine gifts, with no payment changing hands, are exempt. That covers bona fide gift deeds, transfers under a will, and family transfers where no consideration is paid.3New York State Senate. New York Tax Code 1449-EE – Exemptions
Agricultural Land
Land restricted entirely to agricultural use, subject to a conservation easement, or covered by a purchase-of-development-rights agreement is exempt, as is viable agricultural land as defined in the Agriculture and Markets Law. Given the amount of farmland in Riverhead and Southold, this exemption gets regular use.3New York State Senate. New York Tax Code 1449-EE – Exemptions
Other Common Exemptions
- Conveyances to or from the United States, New York State, or any of their agencies and political subdivisions.
- Transfers to or from charities, religious organizations, and educational institutions.
- Restructurings that change the form of ownership without changing who actually benefits (such as moving property into your own LLC).
- Deeds given solely to secure a debt, such as a mortgage.
- Conveyances made under federal bankruptcy proceedings or in connection with a tax sale.
- Deeds that confirm, correct, or supplement an earlier recorded deed without additional payment.
Any exemption is claimed through the Peconic Bay Region Community Preservation Fund form filed with the Suffolk County Clerk at closing.
Paying the Tax at Closing
Payment is made when the deed is recorded, by certified check payable to the Suffolk County Clerk.1Suffolk County Clerk. Peconic Bay Region Community Preservation Fund Tax Form The Clerk will not record the deed until the tax is paid in full, so a missing check or a calculation error can hold up the entire transfer.
Several forms go in with the deed:
- Form TP-584, the New York State Combined Real Estate Transfer Tax Return required for every real property conveyance.6New York State Department of Taxation and Finance. Form TP-584 – Combined Real Estate Transfer Tax Return
- The Peconic Bay Region Community Preservation Fund form, a separate Suffolk County form used to calculate the tax, identify the property as improved or vacant, and claim any exemption.
- The Suffolk County Recording and Endorsement Form.
- Form RP-5217, the real property transfer report.
Nonresident sellers also file Form IT-2663 and pay any estimated personal income tax due at the time of recording.7Suffolk County Government. Suffolk County Clerk – Recording – Forms All forms must be printed on legal-size paper (8½ × 14 inches) per the Clerk’s requirements. Your real estate attorney will usually prepare and assemble these documents before closing.
The Other Transfer Taxes Stacked on Top
The CPF tax is not the only transfer tax on the closing statement. New York State charges its own real estate transfer tax of $2 per $500 of sale price, roughly 0.4%, on every conveyance. Sales of $1 million or more also trigger New York’s additional transfer tax, commonly called the mansion tax, at 1% of the full purchase price. Both apply on top of the 2% CPF tax.
The combined bill adds up quickly on high-value sales. A $2 million home in Southampton would owe roughly $40,000 in Peconic Bay tax (no exemption above $2 million), $8,000 in state transfer tax, and $20,000 in mansion tax: about $68,000 in transfer taxes before recording fees or attorney costs. Build these numbers into your budget early; buyers coming from areas without a local transfer tax are often caught off guard by the total.
How Long the Tax Will Be Around
The 2% tax first took effect on April 1, 1999, and the legislature has extended it several times. The current expiration date is December 31, 2050.8Office of the New York State Comptroller. Peconic Bay Community Preservation Fund Unless the legislature repeals or modifies it before then, the tax will remain in effect in all five towns through 2050.