- July 07, 1998
- All New York State Office Counsel, Managers and Agents
- Enabling Legislation Authorizing the Imposition of a Real Estate Transfer Tax on Conveyances in the Peconic Bay Region of Suffolk County
Pursuant to Chapter 114 of the Laws of 1998, the New York State Legislature, in an effort to create a fund dedicated to the preservation of open space, natural areas and historic places, has authorized the Town Board of any town in the Peconic Bay Region, (which is defined in the statutes as the towns of East Hampton, Riverhead, Shelter Island, Southampton and Southold) to enact a real estate transfer tax on each conveyance of real property or interest therein in those towns, where the consideration exceeds $500., at the rate of 2% of the consideration for the conveyance. (New Section 1449-BB-Tax Law)
The tax is to be repaid at the same time as the New York State Real Estate Transfer Tax ("Stamp" Tax) is paid and is to be reported on a tax return to be filed with the Treasurer of the County of Suffolk or Recording Officer in that County. The tax form is to be identical to the TP-584 except to the extent that it will reflect the provisions of the new statute that are different from, in addition to, or inconsistent with the provisions of the statute authorizing the use of the TP-584. (New Section 1449-CC-Tax Law)
The tax is to be paid by the Grantee. If the Grantee fails to pay the tax or is exempt from the tax, the Grantor is required to pay the tax. The tax return and the tax must be paid at the time an instrument of conveyance is presented for recording. (New Section 1449-DD-Tax Law)
The statute provides that, in the towns of East Hampton, Shelter Island and Southampton, an exemption of $250,000 shall be allowed on the consideration for a conveyance of improved real property or interest therein, and $150,000 for unimproved real property.
In the towns of Riverhead and Southold, the exemption for improved property is $150,000. On unimproved property the exemption is $75,000. (New Section 1449-EE-Tax Law)
The legislation lists the conveyances which are exempt from the new tax (New Section 1449-EE-Tax Law) and provides a credit against the tax to the Grantee to the extent that the tax was paid by such party on the prior creation of a leasehold of all or substantially all of the same property or on the granting of an option or contract to purchase all or a portion of such property. The statute contains a sunset provision pursuant to which the tax will expire and be of no further force and effect after December 31, 2010.
A copy of the statutes is available from our New York City office.
Although the actual adoption of the tax by the Town Boards of the towns in question is subject to mandatory referendum, the tax, once adopted, may be upon us very quickly. Accordingly, this memo is intended to prepare you for the expected event. We will advise you as soon as we know of the adoption of the tax by local authorities.
Should you have any questions, please do not hesitate to contact Company Counsel.
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