Suffolk County Transfer Tax: Rates, Mansion Tax, and Peconic Bay

The Suffolk County transfer tax is really a stack of taxes that hit every real property sale: New York State charges a base transfer tax of $2 per $500 of price (0.4%), adds a 1% mansion tax on residential sales of $1 million or more, and in the five East End towns a 2% Peconic Bay Community Preservation Fund tax plus a 0.5% Community Housing Fund tax apply on top. Together these push closing costs in Suffolk higher than much of the state, especially east of the Shinnecock Canal.

The Base New York State Transfer Tax

Every conveyance in Suffolk County where the price exceeds $500 owes the state’s base transfer tax of $2 for each $500 of consideration, which works out to 0.4% of the sale price.¹ A $600,000 sale produces $2,400 in base tax.

For one-, two-, and three-family houses, individual condos, and any transfer under $500,000, the taxable amount excludes the value of any existing mortgage or lien that stays on the property at closing. For other conveyances, the tax is calculated on the full consideration, including debt the buyer assumes.¹

Mansion Tax at $1 Million

Once the price of a residential property reaches $1 million, a separate 1% tax applies on top of the base. “Residential” is defined broadly to cover any premises used or usable as a personal residence, including single-family homes, condos, and co-op units.² The 1% runs on the whole price, not just the amount above $1 million. A $1.2 million home triggers $12,000 in mansion tax plus $4,800 in base tax, for $16,800 in state-level obligations.

The mansion tax is the buyer’s obligation by statute. If the buyer fails to pay, the seller becomes jointly liable and the state can pursue either party.²

Extra Taxes on the East End: Peconic Bay

Properties in the five East End towns face a transfer tax that applies nowhere else in Suffolk. The Peconic Bay region is East Hampton, Riverhead, Shelter Island, Southampton, and Southold, and each town imposes a 2% real estate transfer tax under Article 31-D to fund open-space preservation and land acquisition.³

The 2% applies to the full consideration, but residential transactions get an allowance that comes off the top. How big that allowance is depends on the town and whether the lot is improved:

East Hampton, Shelter Island, and Southampton: $400,000 off for improved residential property, $100,000 off for unimproved residential land.
Riverhead and Southold: $200,000 off for improved residential property, $75,000 off for unimproved residential land.

Those allowances only apply when the price is $2 million or less.⁴ A $900,000 home in Southampton pays the 2% on $500,000, producing $10,000 in preservation fund tax. A $2.5 million sale in the same town gets no allowance because the price clears the $2 million ceiling.

The 0.5% Community Housing Fund Tax

These same five towns are authorized to add a 0.5% supplemental tax for affordable housing on top of the 2%, bringing the combined Peconic Bay rate to 2.5% where adopted.³ Southampton collects the full 2.5%.⁵ Each town has to adopt it by local law and voter referendum, so not every Peconic Bay town necessarily collects it. Confirm the current combined rate with the town clerk before closing.

First-Time Homebuyers

First-time buyers in the Peconic Bay region can claim a full exemption from both the preservation and housing fund taxes if they meet income and purchase-price caps. In Southampton, the property has to cost no more than roughly $1.2 million, with household income limits of about $174,000 for one or two people and $203,000 for three or more. The figures are tied to SONYMA loan program limits and adjust periodically.⁶ Thresholds can differ by town, so confirm eligibility before closing.

Who Pays What

State law assigns each tax to a party, though a purchase contract can shift the economic burden:

Base transfer tax (0.4%): the seller pays. If the seller doesn’t pay or is exempt, the buyer becomes liable and both parties share joint and several responsibility.⁷
Mansion tax (1%): the buyer pays, with the seller on the hook if the buyer doesn’t.²
Peconic Bay taxes (2% plus 0.5%): the buyer pays.⁸

One useful wrinkle: when a buyer contractually agrees to pay the base transfer tax on a residential deal, that payment is excluded from the “consideration” used to compute the tax, so the tax isn’t calculated on top of itself.⁷

Common Exemptions

The state transfer tax and the Peconic Bay tax exempt a similar set of transactions. The ones most ordinary buyers and sellers encounter:

Conveyances by or to the United States, New York State, their agencies, and political subdivisions. A private buyer purchasing from a government entity, though, still owes the tax.
Transfers that change only the form of ownership, such as moving a property from your own name into an LLC or trust you fully own, where beneficial ownership doesn’t change.
Creating or assigning a mortgage, because no ownership interest permanently changes hands.
Bona fide gifts with no consideration and not tied to a sale.
Deeds that confirm, correct, or supplement a previously recorded conveyance without new consideration.
Transfers made under the federal bankruptcy act.

These show up in both statutes.⁹⁴ The Peconic Bay statute adds further exemptions for property subject to conservation easements, agricultural restrictions, or development-rights agreements. Exemptions have to be claimed when you file by completing the right section of Form TP-584. Miss the window and you pay the full tax upfront and chase a refund afterward.

Non-Resident Sellers

If you’re selling and you’re not a New York State resident, there’s an extra step at closing. Under Tax Law Section 663, non-resident individuals, estates, and trusts have to pay estimated New York income tax on the gain at the time of recording, using Form IT-2663. It isn’t a flat rate; you compute the actual gain and estimate the income tax owed on it.¹⁰

You can skip the payment if the property was your principal residence under IRC Section 121 (generally two of the five years before sale), if the transfer is a foreclosure or deed-in-lieu, or if a government agency is involved. When only part of the property qualifies as a principal residence, estimated tax is due on the gain from the non-residential portion.¹⁰ Non-resident sellers who skip this step can have the deed held up at the clerk’s office.

The Forms You File

Every recording in Suffolk County needs several pieces beyond the deed. Miss one and the filing gets rejected at the counter.

Form TP-584

The Combined Real Estate Transfer Tax Return handles the base state tax, the mansion tax if it applies, the credit-line mortgage certificate, and the estimated personal income tax certification. It asks for the property’s tax map number (section, block, lot), full legal names and addresses of all parties, and the exact consideration, including cash, property exchanged, and any debt assumed.¹¹ Non-resident sellers also complete Schedule D to claim an exemption or document their IT-2663 payment.

Peconic Bay Supplemental Form

Transfers in any of the five East End towns need a separate Peconic Bay Region Community Preservation Fund form that computes the 2% and 0.5% after applying the town-specific allowance. It’s filed alongside the TP-584 and the deed.

Form RP-5217

The Real Property Transfer Report has to accompany every deed recorded with the county clerk, even for non-sale transfers such as name changes from marriage, divorce, or death. The filing fee is $125 for residential and agricultural property or $250 for other property types.¹²

Where and How to Submit

Completed forms and payment go to the Suffolk County Clerk at the same time the deed is presented for recording. The clerk accepts certified checks, attorney escrow checks, and electronic filing through authorized e-recording systems. The Suffolk County Real Property Tax Service Agency verifies that the section, block, and lot numbers on the deed match the county tax map before recording goes through.¹³ On top of the taxes, the clerk charges recording fees, including a $200-per-parcel real property tax map verification fee; the current per-page amounts are on the clerk’s deed fee schedule.¹⁴

If You Pay Late

Missing the filing or payment deadline triggers a penalty of 10% of the tax due, plus 2% of the unpaid amount for each additional month of delay, capped at 25% total. Interest also accrues at the underpayment rate set by the Commissioner of Taxation and Finance.¹⁵ The commissioner can waive both the penalty and interest if the delay was caused by reasonable circumstances rather than neglect.

Federal Tax Treatment

Transfer taxes paid at closing can’t be deducted on your federal income tax return as real estate taxes.¹⁶ For buyers, transfer taxes paid as part of settlement costs generally get added to the property’s cost basis, which lowers the taxable gain when you eventually sell. Sellers who pay the base transfer tax at closing can subtract that amount from net proceeds when computing gain. The distinction matters most on high-value properties where the combined taxes run into five figures.

1
New York State Senate. New York Tax Code 1402 – Imposition of Tax
2
New York State Senate. New York Tax Law 1402-A – Additional Tax
3
New York State Senate. New York Tax Code 1449-BB – Imposition of Tax
4
New York State Senate. New York Tax Code 1449-EE – Exemptions
5
Town of Southampton, NY. Frequently Asked Questions
6
Town of Southampton, NY. Frequently Asked Questions – Peconic Bay Community Housing Fund
7
New York State Senate. New York Tax Law 1404 – Liability for Tax
8
New York State Senate. New York Tax Law 1449-DD – Liability for Tax
9
New York State Senate. New York Tax Code 1405 – Exemptions
10
New York State Department of Taxation and Finance. Instructions for Form IT-2663 Nonresident Real Property Estimated Income Tax Payment Form
11
New York State Department of Taxation and Finance. Instructions for Form TP-584
12
New York State Department of Taxation and Finance. Form RP-5217-PDF, Real Property Transfer Report Frequently Asked Questions
13
Suffolk County Government. Verification
14
Suffolk County Government. Deed Fee Schedule
15
New York State Senate. New York Tax Law 1416 – Interest and Civil Penalties
16
Internal Revenue Service. Publication 530, Tax Information for Homeowners