How does this affect the Community Preservation Fund (CPF) Tax?
Voters in five east end towns voted in November 2022 to ratify a new state law aimed at creating an Affordable Housing Fund in an attempt to address the rising cost of housing on the North and South forks of Long Island.
Basically the new Affordable Housing Fund law adds an additional .5% tax to the existing 2% Community Preservation Fund (CPF) tax for a new total tax of 2.5%. This tax is collected upon the sale of most real estate in the four East End towns of Southold, Shelter Island, Southampton and East Hampton. Riverhead Town voted against the Affordable Housing Fund so their CPF tax remains at 2%.
The new law mandates that each town must decide on their own when to start collecting the new tax and must each pass their own amendment to their existing CPF statutes before they can start collecting the tax. The New York State statute mandates that they cannot start collecting the tax until sixty days after passage of the Town law. However as of this writing no town has passed any such law so no additional tax can be collected until 60 days after they do so.
The new law also changes the CPF tax exemptions. Exemption is the portion of the purchase price that is not subject to the tax.
Change No. 1
Under the new law there will be no exemptions for properties where the purchase price is over two million dollars. For purchases over two million dollars the tax will apply to the entire purchase amount.
Change No. 2
The exemption for improved property will increase to $250,000 in Southold and $400,000 in Southampton, East Hampton and Shelter Island.
The exemptions for non-improved property (vacant land) remains the same. In Southold it is 75,000 and in Shelter Island, Southampton and East Hampton it is $150,000.
Lastly the tax is paid at the time of closing and is collected by the title company.
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