Buying or selling in Southampton? Two taxes can change your numbers more than you expect. You want a clear picture of what you will owe, who usually pays, and how to plan before you sign a contract. In this guide, you will learn how the Peconic Bay transfer tax and the New York State mansion tax work, how to estimate them, and what to negotiate. Let’s dive in.
Peconic Bay transfer tax (CPF)
The Suffolk County Community Preservation Fund, often called the Peconic Bay transfer tax, is a county-level surcharge tied to real estate sales on the East End. In local practice, you will often see a 2% rate cited. This is a material cost at closing, so you should confirm the exact current rate with your attorney or title company.
Who pays the CPF in Southampton varies by deal. Some contracts assign it to the buyer, others to the seller, and some split it. Because it is commonly 2% of the sale price, the allocation is a frequent negotiation point and should be stated clearly in the contract.
NYS mansion tax basics
The New York State mansion tax applies to residential sales at or above $1,000,000. The commonly cited rate in practice is 1% of the full purchase price. This tax is typically shown as a buyer closing cost, but payment can be negotiated and should be confirmed in the contract and on the closing statement.
If the sale price is exactly $1,000,000, the mansion tax is triggered. It is due at closing whether you finance the purchase or pay cash.
Other closing taxes and fees
Beyond the CPF and mansion tax, you will typically see:
- NYS real property transfer tax: commonly described as $2 per $500 of consideration, equal to 0.4% of the sale price. Often treated as a seller or grantor cost in practice, but contracts can reallocate it.
- Recording fees: town or county clerk charges to record documents.
- Mortgage recording tax: applies if the buyer places a mortgage on the property.
- Title insurance, attorney fees, commissions, and prorations: routine closing line items that affect your total cash to close or net proceeds.
Calculate your costs
Use these simple formulas to estimate the major taxes. Always confirm the current rates and final amounts with your attorney and title company.
- Mansion tax: 1.0% of purchase price, applied at or above $1,000,000
- CPF (Peconic Bay transfer tax): 2.0% of purchase price
- NYS real property transfer tax: 0.4% of purchase price
$900,000 sale example
- Mansion tax: Not triggered
- CPF (2%): $18,000
- NYS transfer tax (0.4%): $3,600
- Combined illustrative taxes: $21,600
$1,200,000 sale example
- Mansion tax (1%): $12,000
- CPF (2%): $24,000
- NYS transfer tax (0.4%): $4,800
- Combined illustrative taxes: $40,800
$5,000,000 sale example
- Mansion tax (1%): $50,000
- CPF (2%): $100,000
- NYS transfer tax (0.4%): $20,000
- Combined illustrative taxes: $170,000
Who pays and how to negotiate
There is a difference between statutory liability and local custom. Even when a statute assigns responsibility, the parties can negotiate payment in the contract.
- Mansion tax: Commonly shown as a buyer cost, but negotiable.
- CPF (Peconic Bay transfer tax): Payment varies by deal and market conditions. It is often negotiated because of its size.
- NYS real property transfer tax: Often listed as a seller cost, but allocation can be changed in the contract.
Spell out who pays each tax in the contract of sale. Buyers should include these taxes in their cash-to-close plan. Sellers should account for them when setting list price and calculating net proceeds. The title company or closing attorney will collect and remit these taxes as part of the closing process.
Planning checklist
Use this quick checklist before you make or accept an offer:
- Ask for a sample closing statement from recent Southampton deals showing CPF, mansion tax, and state transfer tax allocations.
- Confirm in writing who pays each tax in the contract of sale.
- Loop in a local real estate attorney and title company early to verify current rates and exact amounts.
- If you are financing, ask your lender whether loan proceeds can cover the mansion tax or if you must bring cash.
- If you are selling, run a net sheet that subtracts agreed taxes, commissions, and other closing costs from your target price.
Local takeaways
In Southampton, many sales cross the $1,000,000 threshold, so the mansion tax often applies. The CPF is a meaningful cost at a commonly cited 2% rate, which is why its allocation is typically negotiated. Clear contract language avoids surprises. Because rules and practices can change, verify current rates and procedures with your attorney and title team before you close.
Ready to talk numbers?
If you want a precise estimate for your property and a strategy to negotiate who pays what, let’s talk. Schedule a Market Consultation with Bill Williams for a clear, local plan tailored to your Southampton deal.
FAQs
Does the NYS mansion tax apply if I use a mortgage in Southampton?
- Yes. The mansion tax is a tax on the conveyance and is due at closing whether you finance the purchase or pay cash.
Does the Peconic Bay (CPF) transfer tax apply to every Southampton property?
- The CPF is an East End surcharge used for community preservation. Its application and rate are local, so confirm details with your attorney and title company for your specific property.
If my Southampton purchase price is exactly $1,000,000, do I owe the mansion tax?
- Yes. The mansion tax threshold is typically $1,000,000 and above, so a $1,000,000 sale triggers the tax.
Can I avoid the mansion tax in Southampton with a 1031 exchange or other structure?
- Exchanges and special transfers have their own rules. These are complex and fact specific, so consult a tax attorney or CPA early in the process.
Who collects and sends these taxes at a Southampton closing?
- Your title company or closing attorney will collect the funds at closing and remit them to the appropriate taxing authorities.
Who usually pays the CPF and state transfer tax in Southampton deals?
- Custom varies. Mansion tax is commonly paid by the buyer, while CPF and the state transfer tax are often negotiated and should be spelled out in the contract.
