In East Quogue, a house that sells for $2,000,000 and one that sells for $2,000,001 do not carry the same town tax. Under Southampton Town's transfer-tax rules, the buyer of the second house owes about $10,000 more. One extra dollar of price removes a $400,000 allowance that the first buyer gets to subtract before the tax is calculated.
This fall the line matters more than usual. The median price of a closed single-family sale in the Hamptons in the third quarter of 2026 was $1.995 million, Long Island Business News reported on October 8, citing Miller Samuel data. The typical Hamptons house now sells $5,000 below the point where the town's tax math changes.
How the Allowance Works, and Where It Stops
Every purchase in Southampton Town, which includes East Quogue, Hampton Bays, and the villages of Westhampton Beach and Quogue, pays two stacked town taxes. The first is the 2% Peconic Bay Region Community Preservation Fund tax. The second is a 0.5% Community Housing Fund tax that Southampton voters approved on November 8, 2022, which applies to conveyances on or after April 1, 2023. Together they come to 2.5%. The Town Code makes the buyer, called the grantee, legally liable for the CPF tax. If the buyer doesn't pay or is exempt, the seller must.
The town's CPF filing form shows the order of operations. Start with the price, subtract the allowance, and apply both rates to what remains. For Southampton, the allowance on residential property is $400,000 for an improved property and $100,000 for vacant land, effective April 1, 2023. The same line on the form carries the condition that creates the cliff: "No exemption on conveyance greater than $2,000,000."
The full allowance applies up to that line and none of it applies above. At $2,000,000 the buyer pays 2.5% on $1,600,000, which is $40,000. A dollar more and the buyer pays 2.5% on the full price, which is just over $50,000.
Two Steps Inside the Same Price Band
The town's step isn't the only one. New York State charges a 1% mansion tax, paid by the buyer, on residential purchases of $1 million or more. It applies to the full price once the threshold is reached, and the NYS Department of Taxation and Finance applies it to conveyances outside New York City. The state also charges its basic transfer tax of 0.4% of the price.
That puts one step at $1 million and another at $2 million, and East Quogue's busiest price range sits between and around them. In a spring 2026 agent roundtable, 27east reported an "overwhelming response in the under $2.5 million price range, in places like East Quogue and Hampton Bays," often with multiple offers. Another participant said the heaviest activity was under $2 million and over $10 million.
Here is how the two taxes the code and the state assign to the buyer add up at prices typical of that band, using the town form's method and the state's 1% rate:
| Purchase price | Town CPF + CHF at 2.5% | State mansion tax at 1% | Combined |
|---|---|---|---|
| $950,000 | $13,750 | $0 | $13,750 |
| $1,000,000 | $15,000 | $10,000 | $25,000 |
| $1,500,000 | $27,500 | $15,000 | $42,500 |
| $1,995,000 | $39,875 | $19,950 | $59,825 |
| $2,000,000 | $40,000 | $20,000 | $60,000 |
| $2,010,000 | $50,250 | $20,100 | $70,350 |
| $2,400,000 | $60,000 | $24,000 | $84,000 |
These figures exclude the state's 0.4% basic transfer tax, recording fees, and everything else on a closing statement. Look at the rows on either side of $2,000,000. Adding $10,000 to the price adds $10,350 in these two taxes, so the buyer pays more in tax than the price increase itself.
Why the Second Step Lands on This Fall's Typical Sale
The third-quarter data shows the Hamptons market thinning out and moving toward the line. Long Island Business News reported 385 closed single-family and condo sales in Q3 2026, down from 421 a year earlier. It also reported 973 listings at the end of the quarter, 22.5% fewer than at the end of Q3 2025. The single-family median fell to $1.995 million, about 10.8% below the second quarter's $2.23 million and about 5% below the $2.1 million of a year earlier.
Other outlets measured the same quarter more broadly and landed lower still. Newsday put the Hamptons median at about $1.88 million, and The Real Deal put it at $1.875 million. Those figures cover a wider set of sales than the single-family number. Under either measure, the middle of the market now sits just below $2 million.
With fewer listings, the homes that do come up draw more competition. The 27east roundtable described multiple offers in East Quogue's under-$2.5 million range, and that is the setting where an offer near $2,000,000 is most likely to be pushed a little higher. In a bidding situation, the last increment is the one that crosses the line.
What the Line Changes When the Numbers Get Close
A buyer weighs an offer by total cash out of pocket, while a seller weighs it by the price on the contract. Near $2 million, those two numbers stop moving together. Taking only the two taxes in the table above, here is the arithmetic:
- At $2,000,000, the buyer pays the price plus $60,000, for $2,060,000 in total.
- At $2,005,000, the buyer pays the price plus about $70,175, for about $2,075,175 in total. The seller gains $5,000 and the buyer spends about $15,175 more.
- At $2,010,000, the buyer pays the price plus $70,350, for $2,080,350 in total. The seller gains $10,000 and the buyer spends $20,350 more.
On the other side of the line, an offer of $1,995,000 costs the buyer $5,175 less than one at $2,000,000, and both still get the allowance. The town form shows the allowance applying at exactly $2,000,000 and disappearing above it.
For an East Quogue home listed close to $2 million, the arithmetic shows that a $10,000 increase in price above the line comes to about $20,350 in the buyer's combined cost of price and these two taxes. A competing offer that ends up a few thousand dollars over the line also carries a town tax amount that the contract price doesn't show. The same pattern on a smaller scale applies at $1 million, where the state mansion tax goes from nothing to $10,000.
A Separate Exemption With Its Own Ceiling
The town also offers a full first-time homebuyer exemption from the transfer tax, and its price cap sits just below the same $2 million line. Under the town's first-time home buyer brochure, effective July 6, 2026, the household income ceiling is $197,160, based on SONYMA's non-target limit for one- and two-person households in Suffolk County, and the maximum price for an improved property is $1,960,455. The home must be an owner-occupied primary residence: a one- or two-family house, townhouse, or condominium. The buyer and spouse can't have owned a primary residence in the previous three years, and no purchaser on the contract or deed can own a vacation or investment home anywhere. The program is run by the town's Department of Community Preservation at 24 West Montauk Highway in Hampton Bays. The brochure lists 631-287-5720 and says applying before closing is preferable, with a refund process for those who apply afterward.
The price cap is tied to SONYMA purchase-price limits for Suffolk County, and the income cap to SONYMA household income limits, so both figures move when those limits are updated. A qualifying buyer considering a house in the high $1.9 millions faces a cliff even earlier than $2 million.
Where East Quogue's Share of the 2.5 Percent Has Gone
The tax collected at these closings pays for land that is close to home. According to 27east's year-end report on the fund, Southampton Town's Community Preservation Fund spent just over $58.1 million in 2025. The town bought 15 properties totaling 88.1 acres, most of them in three large acquisitions of farm fields and woodlands in East Quogue, Noyac and Bridgehampton. In East Quogue, that included 25.1 acres on Lewis Road, bought for $5.48 million and intended as a public park, along with enhanced development rights on two nearby working-farm parcels.
The fund also reached the neighboring villages and hamlets. It directed $4 million to the Westhampton Beach Performing Arts Center for capital projects. In Hampton Bays, it bought the David Burliuk historic home at 68 Old Riverhead Road for $790,000, with plans to restore it with the East End Arts Council.
This is general information, not legal, tax or financial advice. Contract terms, exemptions and who pays what depend on your own situation, so confirm the details with your real estate attorney or accountant before you set a price or write an offer.
If you're pricing an East Quogue home near $2 million, or putting together an offer that could cross that line, Bridget Terry can walk through the closing-cost math with you before the numbers are set. Let's Connect.
