What You Need To Know About The 2% Land Transfer Tax (CPF)
Here Are The Facts.
Meaney & Meaney PC recently had a buyer client who agreed to purchase some land in Southampton for $800,000. But, like so many others, he was completely unaware of the Peconic Bay Region Community Preservation Fund – also known as the CPF — which ended up costing him an additional $14,000.
Despite its name, the CPF is not a charitable contribution; it’s a 2% real-estate transfer tax on each transaction occurring in any of the five East End towns (Riverhead, Southold, Southampton, East Hampton, and Shelter Island). This is a one-time tax that the buyer of real estate is required to pay when purchasing improved or vacant property. It’s collected by Suffolk County and distributed to the five towns “to preserve the community character unique to the East End.”
In 1998, the CPF was established by referendum when voters in the five East End towns — Riverhead, Southold, Southampton, East Hampton, and Shelter Island – approved a new real estate transfer tax of 2% on each transaction occurring in these towns.
By the way, you should know that the first $250,000 in East Hampton, Southampton, and Shelter Island, and the first $150,000 in Riverhead and Southold of the purchase price of improved land (or $100,000/$75,000 for unimproved land) is exempt from the tax.
That same year, the voters also approved a referendum creating the Community Preservation Fund which is a conservation program to preserve open space and farmland in the five East End townships. This fund is financed by the CPF. An extensive coalition of farmers, business leaders, environmentalists, realtors, builders, baymen, and civic and community leaders across the region pushed for the creation of the program.
Later, in 2006, voters in all five townships approved a referendum to extend the collection of the CPF from 2020 to 2030.
Interesting Fact! While many believe that the funds raised by the 2% real estate transfer tax go to the Peconic Land Trust for its fund to conserve Long Island’s working farms, natural lands, and heritage, that is not true! The Trust raises its operating budget through charitable gifts and payment for professional services. The Peconic Land Trust doesn’t collect or distribute the CPF funds.
The CPF is a public program managed by each of the five East End towns. The money raised in each of the towns stays in that town and is used to protect open space, farmland, and historic structures. The CPF is also said to help keep down taxes because, when property is left undeveloped, there is no demand for more public services, such as water, police, schools, or roads. CPF Advisory Boards, which are composed of citizens from each town, make recommendations on acquisitions to their respective town boards. The program has reportedly been highly successful, mainly because over 10,000 acres of land have been protected that otherwise would have been lost to development. Specifically, the Community Preservation Fund:
- helps implement key land protection recommendations from a 10-year study to improve and restore the Peconic Estuary;
- has been used to purchase open space and environmentally sensitive lands as a way to protect the quality of drinking water;
- has been used to protect the water quality in the Peconic Bay and local harbors and bays;
- enables towns to continue to purchase developments rights on farmland thereby preserving the farms that produce fresh fruit and vegetables, and a traditional way of life on the East End.
For more information on the CPF, go here.
~ Lori Y., Northport
We were first-time homebuyers without a clue of how the whole process worked. Meaney & Meaney PC took the time to explain everything to us in clear, understandable language, from the time we signed the contract to the day we finally closed. When a problem came up on the title report, James and Andrew went above and beyond to take care of it, and with their expertise, we were able to close on time. Thank you
~ Susan L., Huntington
My husband lost his job and were getting in over our heads with debt. After a few unfortunate failed attempts at directly asking out mortgage company for help , we found Meaney & Meaney PC. Not only did they get us into a mortgage payment that was affordable for our family, they were so understanding and compassionate. Andrew and James were reachable and honest through the process and truly cared about helping us. They never left us hanging and always followed through with their word. If it wasn’t for Meaney & Meaney PC, I’m not sure we would be in our home today. We are so grateful!!!
~ Angela B., Kings Park.
Meaney & Meaney PC handled the sale of our previous home and the purchase of our current one. This involved multiple parties on a very tight schedule and could have been a very stressful experience but everything was concluded on time with a welcome lack of drama.
~ Richard T., Lloyd Harbor