Peconic Land Trust Tax: Rates by Town, Exemptions, and Penalties

If you’re buying real estate in East Hampton, Southampton, Riverhead, Southold, or Shelter Island, you owe a 2% Peconic Bay Community Preservation Fund tax on the portion of the purchase price above a town-specific allowance. The tax is paid once, at the time the deed is recorded, and the money stays in the town where the property sits to pay for open-space acquisition, farmland protection, and historic preservation.¹ It is a separate charge from the New York State transfer tax and the mortgage recording tax, so budget for it on top of those.

Who Pays and When

The tax applies to any transfer of real property in the five towns where the price exceeds $500.² Under the statute, both buyer and seller can be held liable for filing the return and paying what’s owed, but in practice the charge is paid out of the buyer’s closing funds, with the attorneys handling who ultimately bears the cost as part of the purchase negotiation.³

This is a one-time tax tied to the transaction, not an annual property tax. Once paid at recording, it does not come back.

How to Calculate What You Owe

The 2% rate does not apply to the full purchase price. Each town subtracts a dollar allowance first, and only the balance above that allowance is taxed. Allowances vary by town and by whether the parcel is improved (has a building) or vacant land. Towns can amend their own figures through local law, so confirm the current number with your closing attorney or the town clerk before you run the math.

Southampton

Southampton exempts the first $400,000 of an improved residential parcel from the tax when the total price is $2,000,000 or less, and the first $100,000 of a vacant, unimproved parcel.⁴ An improved home bought for $1,500,000 would net a taxable balance of $1,100,000 and a tax of $22,000.

Southold

Southold exempts the first $200,000 on improved property and the first $75,000 on unimproved land.⁵ A $1,000,000 home purchase there leaves $800,000 taxable, producing a $16,000 bill.

East Hampton, Shelter Island, and Riverhead

According to the Suffolk County Clerk’s Peconic Bay Region form, East Hampton and Shelter Island each allow $250,000 for improved property and $100,000 for vacant land. Riverhead allows $150,000 for improved property and $75,000 for vacant land.³

Transfers That Are Exempt

New York Tax Law lists a number of conveyances that fall entirely outside the 2% tax. The categories most likely to come up for an ordinary buyer or seller include:⁶

Genuine gifts of real property, where no payment is made and the transfer is not connected to a sale.
Deeds that only confirm, correct, or supplement a previously recorded deed, with no additional money changing hands.
Transfers made solely to secure a debt, such as a mortgage or lien.
Conveyances to or from the United States, New York State, or any of their agencies, political subdivisions, or public corporations.
Transfers that change only the form of ownership without changing who benefits, such as moving a home into your own LLC.
Conveyances made under federal bankruptcy proceedings.
Deeds issued through a tax sale.
Property already covered by agricultural, conservation, or open-space easements, development-rights agreements, or agricultural-district restrictions.
Transfers of viable agricultural land that will remain in farming use.

Partition deeds, and the execution of a contract or option to buy without taking possession, also fall outside the tax. Any claimed exemption needs to be identified on the Peconic Bay Region form filed with the Suffolk County Clerk.

First-Time Homebuyer Exemption

A narrower exemption is available to first-time homebuyers buying a primary residence in Southampton, East Hampton, Shelter Island, or Southold. Riverhead does not participate. Every person named as a buyer must qualify as a first-time homebuyer, and both the purchase price and the buyer’s household income must fall within caps tied to the State of New York Mortgage Agency’s Low Interest Rate Program for Suffolk County.⁶

Price Caps

In Southampton, East Hampton, and Shelter Island, the price cannot exceed 150% of the SONYMA non-target one-family purchase price limit for Suffolk County. Southold’s cap is tighter at 60% of that same limit.⁶ As of the SONYMA figures effective August 2025, the non-target one-family limit for Suffolk County is $1,255,920.⁷ That works out to roughly $1,883,880 in Southampton, East Hampton, and Shelter Island, and about $753,552 in Southold. The statute looks to the limits in effect on the contract date, so check the current SONYMA figures when you sign.

Income Cap

Household income cannot exceed the SONYMA non-target income limit for a one- or two-person household in Suffolk County.⁶ SONYMA publishes the current dollar figure and updates it regularly. Going over the income ceiling by any amount disqualifies the buyer, and because the controlling date is the contract date, locking in a signed contract before a limit changes can matter.

Filing and Paying at Closing

Payment happens when the deed is recorded at the Suffolk County Clerk’s office. The buyer’s closing attorney prepares the Peconic Bay Region Community Preservation Fund form, which goes in with the standard Form TP-584 (the state’s combined real estate transfer tax return). Payment is made by certified check or attorney escrow check payable to the Suffolk County Clerk.³ The Clerk will not record the deed without the completed form and the correct payment.

Once the Clerk accepts the filing, the tax obligation is satisfied. The County forwards the money to the appropriate town on a monthly basis.⁸ Co-op and condo transfers that do not involve a traditional deed are handled a little differently: the tax goes directly to the town rather than through the County Clerk.

Penalties for Late Payment

Missing the filing deadline is expensive. The initial penalty is 10% of the tax owed. After the first month of delinquency, an additional 2% interest penalty accrues for each month or partial month the tax remains unpaid, up to a maximum of 25%. The county also charges daily compounded interest on the outstanding balance.³

On a $20,000 tax bill, the 10% penalty alone adds $2,000 on day one. Most buyers never see these numbers because the tax clears at closing as a condition of recording the deed; the penalty structure mainly reaches transfers that should have been recorded but weren’t.

What the Money Pays For

Each town’s Community Preservation Fund can buy land, development rights, and other property interests for conservation. Towns may also direct up to 20% of fund revenue to water quality improvement projects. The fund was created in 1998 and has been extended through December 31, 2050, so the 2% tax will stay on the books for the foreseeable future.⁹ Revenue stays within the town that generated it; a tax paid on a Shelter Island property cannot be used in Southampton or anywhere else.¹

1
New York State Senate. New York Code TWN – Peconic Bay Region Community Preservation Funds
2
New York State Senate. New York Tax Law Section 1449-BB
3
Suffolk County Government. Peconic Bay Region Community Preservation Fund Tax Form
4
Southampton, NY – Official Website. Frequently Asked Questions
5
Town of Southold. Frequently Asked Questions
6
New York State Senate. New York Tax Law Section 1449-EE – Exemptions
7
New York State Homes and Community Renewal. Low Interest Rate Program Income and Purchase Price Limits
8
Office of the New York State Comptroller. Peconic Bay Community Preservation Fund 2023-MR-1
9
Southampton, NY – Official Website. Fund Overview