By Andrew Borchini · March 2026
Local transfer taxes, mansion tax and mortgage recording tax can add six figures to a Hamptons purchase. Here is how to build a realistic budget.
The cash needed to buy a Hamptons home includes more than the down payment. Local transfer taxes, New York's mansion tax, financing charges and closing adjustments can add a substantial amount, even when you are paying cash.
A useful budget starts with the property's town, price and financing plan. This guide focuses on ordinary residential purchases in the Towns of Southampton and East Hampton. Vacant land, commercial property and purchases elsewhere on the East End can follow different rules.
Separate the down payment from purchase expenses
Your down payment is money applied to the purchase price. Closing costs are additional expenses. The contract deposit is normally credited toward the price at closing; it should not be added again as a separate cost.
Suppose you buy a $3 million home with a $2.4 million mortgage. Your equity contribution is $600,000. If you paid a $300,000 contract deposit, the remaining amount toward the price is $300,000, before taxes, fees, adjustments and any credits.
Keep a separate cash reserve for work after closing. Furnishings, a pool repair or an immediate roof project may be part of the purchase decision without appearing on the closing statement.
The local preservation and housing taxes
Southampton and East Hampton purchases generally incur a 2% Community Preservation Fund tax and a 0.5% Community Housing Fund tax. Buyers often refer to the combined charge as the Peconic or CPF tax. It is paid in addition to the state mansion tax when that tax applies. [1] [2]
For an ordinary improved residential purchase below $2 million in these towns, the standard $400,000 allowance reduces the amount subject to the combined 2.5% charge. On a $1.5 million purchase, the illustrative calculation is $1.1 million multiplied by 2.5%, or $27,500. [2]
For a purchase above $2 million, the standard allowance is unavailable. A $3 million purchase therefore carries a $75,000 combined local charge, assuming no special exemption. The tax applies to the full taxable consideration rather than only the amount above $2 million. [2]
At exactly $2 million, have your attorney and title company confirm the town's calculation before fixing the budget. The state statute and the regional form use wording that differs from East Hampton's local code at that precise boundary. This is a worthwhile detail to resolve when an offer is near the threshold. [2] [3]
The property's legal tax-map location determines which town's rules apply. A mailing address or familiar hamlet name is not enough. Ask the title company to confirm the town and applicable allowance from the property records.
The Hamptons mansion tax is 1 percent
New York's mansion tax generally applies to residential purchases at $1 million or more. In Suffolk County, the rate is 1% of the taxable residential consideration. The graduated higher rates covered in our NYC mansion tax guide do not apply to a Hamptons house simply because its buyer lives in NYC. [4]
For an ordinary $3 million residential purchase, the mansion tax is $30,000. Combined with the $75,000 local charge, that is $105,000 in buyer transfer taxes before title insurance, legal fees or financing costs.
New York's separate basic real estate transfer tax is generally the seller's obligation. Review the contract for any provision shifting it to you, particularly in a new construction transaction. [4]
Financing adds mortgage recording tax
Suffolk County's total mortgage recording tax rate is 1.05%. For a typical bank mortgage on a qualifying one- or two-family home, the lender pays the 0.25% special additional component, leaving approximately 0.8% for the borrower. An eligible $30 reduction also applies. Loan structure and lender exemptions can change the calculation. [5] [6]
A new $2.4 million mortgage therefore produces an illustrative buyer charge of $19,170: $2.4 million multiplied by 0.8%, less $30. This is calculated on the mortgage amount, not the purchase price.
A cash purchase avoids this mortgage recording charge and loan-related fees. It still incurs applicable purchase transfer taxes, title and legal expenses, and closing adjustments.
If an existing mortgage might be assigned and consolidated into your new loan through a CEMA, ask your lender and attorney to evaluate the potential tax savings and additional fees early. Availability depends on the transaction and cooperation from the relevant parties; budget without the savings until they are confirmed. [9]
Three examples of the tax portion
The table assumes an ordinary improved residential house in Southampton or East Hampton, no special transfer-tax exemption, 20% down and a new qualifying bank mortgage. It excludes title, legal, lender and recording fees, prepaids and adjustments.
$1.5 million home
Item | $1.5 million home |
|---|---|
Local CPF and housing taxes | $27,500 |
NYS mansion tax | $15,000 |
Mortgage at 80% of price | $1,200,000 |
Buyer mortgage recording tax | $9,570 |
Total illustrated buyer taxes | $52,070 |
$3 million home
Item | $3 million home |
|---|---|
Local CPF and housing taxes | $75,000 |
NYS mansion tax | $30,000 |
Mortgage at 80% of price | $2,400,000 |
Buyer mortgage recording tax | $19,170 |
Total illustrated buyer taxes | $124,170 |
$5 million home
Item | $5 million home |
|---|---|
Local CPF and housing taxes | $125,000 |
NYS mansion tax | $50,000 |
Mortgage at 80% of price | $4,000,000 |
Buyer mortgage recording tax | $31,970 |
Total illustrated buyer taxes | $206,970 |
The $3 million example requires $600,000 toward the price plus $124,170 in these taxes, for $724,170 before the other expenses. If purchased entirely with cash, its illustrated transfer taxes would total $105,000.
These are planning calculations, not a closing quote. The title company and attorney should confirm taxable consideration, available exemptions and any assigned mortgage treatment for the actual purchase.
Add the expenses that require quotes
Several meaningful costs depend on the property or service provider. Request a title estimate covering the owner's policy, any lender's policy, endorsements, searches and recording charges. Ask your attorney what the quoted legal fee includes and whether unusual title, entity or financing work carries an additional charge.
For a financed purchase, review the lender's Loan Estimate for origination charges, appraisal fees, points and lender credits. One point equals 1% of the loan amount, so a rate quote with points can change your initial cash requirement materially. Compare the same loan terms when comparing offers.
Before signing, obtain inspection quotes appropriate to the house. Depending on the property, the general inspection may need to be supplemented by evaluations of the septic system, pool, well, roof or other systems. These expenses may be paid well before closing, but they still belong in the purchase budget.
Avoid a generic allowance that groups every remaining expense into one small number. A waterfront home's insurance quote and a straightforward inland home's quote may differ significantly. Get property-specific figures while you can still use them in your decision.
Prepaids and adjustments also require cash
The closing statement may require reimbursement of property taxes already paid by the seller, prepaid mortgage interest, insurance premiums and deposits into a lender's tax and insurance escrow account. Heating fuel and other property-specific items can also require adjustment. These amounts depend partly on the closing date. [7]
Some are payments toward future ownership expenses rather than fees for the transaction. They still affect the money you need at closing. Ask for a preliminary adjustment estimate and reconcile it against the final statement.
For most consumer mortgages, the lender must provide a Closing Disclosure at least three business days before closing. Review its cash-to-close figure against the latest Loan Estimate and your attorney's closing statement so deposits, costs already paid and credits are counted correctly. [7]
Check exemptions before assuming they apply
Qualifying first-time homebuyers purchasing a primary residence may be eligible for an exemption from the local transfer tax. Income, purchase price, buyer qualifications and application requirements apply. Buying your first Hamptons vacation home does not by itself establish eligibility. [8]
Southampton asks applicants to apply at least one week before closing and provide the approved application to their attorney. Check the town's current limits and requirements early rather than assuming an exemption can be arranged at the closing table. [8]
Build the budget before making the offer
Before settling on a price, confirm:
The legal town, property classification and local tax calculation.
The mansion tax and any seller costs shifted by the contract.
The mortgage amount, recording tax and quoted lender charges.
The title, attorney and inspection estimates.
Insurance, prepaids, tax adjustments and lender escrow deposits.
The cash you want available for repairs and ownership after closing.
A property-specific budget helps you compare two houses honestly. A lower asking price can come with greater immediate repair needs, while a purchase near a tax threshold can change the cash required by more than the price difference alone.
Buying in the Hamptons with BRN
We specialize in representing buyers and help you evaluate the property, plan the purchase budget and coordinate the process with your attorney, lender and inspectors.
You never pay BRN a brokerage fee. We return half of the commission we receive from the seller to you, up to 1.5% of the purchase price. Ask us to confirm the expected rebate and its treatment with your lender before including it in your closing plan.
Considering a home in Southampton or East Hampton? Send us the listing, and we can help you work through the costs alongside the property itself.
Sources
[1] New York Tax Law section 1449-bb, authorizing the local preservation and supplemental housing taxes.
[2] Peconic Bay regional tax form hosted by Southampton, including the allowances and combined calculation.
[3] New York Tax Law section 1449-ee and East Hampton Code section 112-2-40. The exact $2 million boundary should be confirmed for the transaction.
[4] NYS Department of Taxation and Finance real estate transfer tax guidance.
[5] Suffolk County Clerk mortgage tax guidance.
[6] New York Tax Law section 253, including the lender-paid component and eligible reduction.
[7] CFPB Closing Disclosure explainer and required delivery timing.
[8] Southampton first-time homebuyer exemption information and application.
[9] New York Tax Law section 255 on supplemental and consolidated mortgages.
