East End Transfer Tax
The new East End Transfer tax, relating to real property transfers on the east end of Long Island went into effect in the Towns of East Hampton, Shelter Island, Southampton and Riverhead on April 1, 1999 and in the Town of Southold on March 1, 1999.
The tax is imposed on each conveyance of real property (or interest therein) in the above mentioned towns where the consideration exceeds $500.00. The term "conveyance" includes many types of transfers, from a leasehold grant, surrender or assignment to the acquisition of a controlling interest in an entity that owns real property. Rules and regulations similar to those used in conjunction with the New York State Real Estate Transfer Tax, Have been or will be prepared be the affected towns, and will explain the applicability of the tax to each type of conveyance.
The tax rate is 2% of the amount of consideration paid for the transfer. The statute provides that allowance of $150,000 on improved property (and $75,000 for unimproved property) located in Riverhead and Southold or $250,000 on improved properties located in East Hampton, Southampton and Shelter Island (and $100,000 for unimproved property), can be deducted from the consideration paid for the transfer. The tax is then paid on the new or "taxable" consideration and must be paid by the grantee. In the event that the grantee fails to pay the tax or is exempt, then the grantor has the obligation to pay the tax.
The Grantor and Grantee will be required to execute a new form known as the Peconic Bay Region Community Preservation Form (CPF) in which they provide details of the transaction, make calculation of the tax due, and, if the contact is entitled to be "grandfathered", make a representation that the contract was entered into prior to the effective date of the tax, Please note that the new CPF does not replace the New York State Transfer Tax Return TP-584 or the New York State Board of Equalization and Assessment form but is in addition to those Forms. It is yet another document that must be picked up by the title closer at any closing on the property located in one of the affected townships.
The Suffolk County Clerk has also prepared a new Recording and Endorsement (Cover) page that can be used immediately. Copies of both the CPF and the Cover Page are available in our Branch offices.
Please take note that Line 4 of the Schedule B requires that the tax be made payable to the Suffolk County Clerk and be paid by certified check.
Should you wish to discuss the tax or the contents of this article, please contact out company counsel.
Penalties:
Any grantor or grantee failing to file a return or to pay any new tax within the time require shall be subject to a penalty of 10% of the amount of tax due plus an interest penalty of 2% of such amount for each month of delay or fraction there of after the expiration of the first month after such return was requires to be filed or the tax became due. However, the interest penalty shall not exceed 25% in the aggregate.
Interest:
Daily compounded interest will be charged on the amount of the tax due not paid within the time required.
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