When you’re buying a home in any of the 5 East End towns (East Hampton, Southampton, Southold, Riverhead, and Shelter Island), there is currently a 2% tax on real estate purchases, above certain minimum threshold levels. Please see this post for information on a possible amendment to the tax. However, for first-time homebuyers within certain income and purchase price levels, there is an exemption from paying the tax.
A first-time homebuyer is obviously someone that has never owned a home before. But, as defined by this statute, a first-time homebuyer can also be someone that has not owned a property within the applicable town for the prior 3-year period and who does not own a vacation home. So, for example, if you own a primary residence in East Hampton, you want to buy a home in Southampton, and you meet the income and purchase price limits, you can be considered a first-time homebuyer under the exemption.
Here are the current income and purchase price limits for each of the 5 East End towns:
The above numbers are determined by the State of New York Mortgage Agency for Homebuyers and are subject to change.
If you are eligible for the first-time homebuyer exemption, it is important to complete an application and submit it to the Town Attorney’s Office for the relevant town prior to closing. The application requires the submission of a federal or state tax return for the prior year and an executed contract of sale. You can still receive a refund if you complete the application within 2 years after closing, but the process to get a refund takes a lot of time.
The Peconic Bay Tax has several other exemptions as well, though the first-time homebuyer is the most frequently applied exemption. Please contact our office if you have any questions regarding the Peconic Bay Tax.
PLEASE NOTE that this article is not intended to create an attorney-client relationship and the information within does not substitute for a consultation with an attorney.
Copyright 2021 Crouch McWilliams Law Group, PLLC