What Are Transfer Taxes in a New York Home Sale?
What are transfer taxes and who pays them in a New York home sale?
New York charges a state transfer tax on most home sales, generally paid by the seller, plus a mortgage recording tax paid by the buyer on any new mortgage. If the property is in one of the five East End towns of Suffolk County — East Hampton, Southampton, Southold, Shelter Island, or Riverhead — an additional Peconic Bay Region Community Preservation Fund transfer tax, usually paid by the buyer, may also apply.
New York State Transfer Tax
New York State charges a real estate transfer tax on the sale of most residential property, calculated based on the sale price. It's customarily paid by the seller and collected at closing, then remitted to the state along with a transfer tax return. In New York City, additional city-level transfer taxes apply on top of the state tax; that additional city tax does not apply to sales in Suffolk or Nassau County.
Mortgage Recording Tax
Separately from transfer tax, New York charges a mortgage recording tax whenever a new mortgage is recorded against a property. This is customarily paid by the buyer (the borrower), and it's calculated as a percentage of the loan amount, not the purchase price — so an all-cash purchase with no mortgage avoids it entirely. Suffolk and Nassau Counties fall within the Metropolitan Commuter Transportation District, which affects the exact rate applied; your attorney or lender can confirm the precise calculation for your loan amount.
The Peconic Bay Region Community Preservation Fund Tax
This is a Long Island–specific tax that surprises a lot of buyers who aren't from the area. The five East End towns of Suffolk County — East Hampton, Southampton, Southold, Shelter Island, and Riverhead — each impose a Community Preservation Fund transfer tax on real estate sales within the town, with revenue used to fund open space and farmland preservation. It's customarily paid by the buyer and is calculated as a percentage of the purchase price.
Each of the five towns offers an exemption for a portion of the purchase price, particularly for a buyer's primary residence, which reduces the taxable amount. The exemption thresholds and mechanics differ somewhat by town and have been adjusted over time, so this is worth confirming directly with your attorney for the specific town where you're buying rather than assuming a flat number.
Where This Money Shows Up on Your Settlement Statement
All of these taxes appear as line items on the closing settlement statement, separate from your attorney's fee, title insurance, and recording fees. Because the CPF tax in particular can be a meaningful amount on East End purchases, it's worth asking your attorney to estimate all applicable transfer taxes early in the process, not just at the closing table.
Who Actually Pays — And Whether It's Negotiable
The customary allocation — seller pays state transfer tax, buyer pays mortgage recording tax and CPF tax — is just custom, not a legal requirement. In a competitive market, these allocations are occasionally negotiated as part of the contract, particularly in East End transactions where the CPF tax adds real cost. Whatever is agreed to should be written into the contract explicitly rather than assumed.
A Few Sales Are Exempt or Reduced
Certain transfers are exempt from some or all of these taxes — transfers between spouses, transfers into certain trusts, and some transfers involving governments or nonprofits, among others. Whether a specific transaction qualifies for an exemption is a legal question that depends on the exact structure of the transfer, not something to assume without your attorney confirming it applies.
When it is worth a call
- You are buying property in one of the five East End towns and want an estimate of the CPF tax
- You are negotiating who pays which closing costs as part of your contract
- You think your transaction might qualify for a transfer tax exemption
- Your settlement statement includes a tax line item you do not recognize
Common questions
- Is the Peconic Bay tax the same as the New York State transfer tax?
- No, they are separate taxes that can both apply to the same sale if the property is in one of the five East End towns. The state transfer tax applies statewide; the CPF tax is specific to those five Suffolk County towns.
- Does the CPF tax apply to a house in Smithtown or elsewhere in central Suffolk?
- No. The Community Preservation Fund transfer tax only applies within East Hampton, Southampton, Southold, Shelter Island, and Riverhead. A sale elsewhere in Suffolk County, including Smithtown, is not subject to it.
- Can I avoid the mortgage recording tax by paying cash?
- Yes, in the sense that the tax is only triggered by recording a new mortgage. If there's no mortgage, there's nothing to record and no tax on that specific transaction — though other taxes, like the state transfer tax, still apply.
- Who calculates and files these taxes?
- Your attorney typically prepares the necessary transfer tax returns and coordinates payment as part of the closing. This isn't something buyers or sellers file on their own after the fact.
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