With tax grievance season underway, we asked East End agents: How do property tax concerns on the East End compare to buyer expectations in other luxury second-home markets? While many areas have low taxes, we wondered, what role should Hamptons agents play in educating clients about tax grievances, and whether proactive tax planning can be make the difference between a smooth transaction and a stalled deal?
Ashley J. Farrell
THE CORCORAN GROUP
WESTHAMPTON BEACH AND TAMPA, FL
Comparing taxes in the Hamptons to othaer second‑home markets isn’t an “apples to apples” proposition as there are infinite answers. Every region has its own governance structure and revenue model. Florida, for example, often levies higher property taxes than New York because the state doesn’t collect income tax. That said, taxes in the Hamptons are much more attractive when compared to the rest of Long Island and much of the Hudson Valley. Where I work, in Southampton Township, which includes Westhampton Beach, Remsenburg, Quogue, Southampton Village, and more, the tax grievance conversation is rare. However, once you move west into Brookhaven Township, outside what most consider the Hamptons, that conversation becomes much more commonplace. As for closing costs, the 2.5% Peconic Bay tax and 1% mansion tax are non‑negotiable line items in the Hamptons. I outline them in writing before we begin, so buyers know exactly what to expect. There’s no workaround as these taxes are law, so transparency up front limits surprises and keeps the purchase process on track. When it comes to tax planning, I’m happy to connect clients with a respected accountant. Leaning on trusted professionals ensures buyers receive accurate information and the ability to move through the transaction with confidence.
Susan Orioli
ENGEL & VÖLKERS NORTH FORK
Property taxes are a consideration for a segment of East End buyers, particularly those who are highly sensitive to carrying costs and are comparing multiple second-home markets. However, many buyers entering the Hamptons and North Fork already understand that property taxes are viewed as part of the overall cost of owning in a premier coastal destination rather than a deterrent.
That said, there are cases where a property’s tax burden is materially out of alignment with comparable homes. In those situations, taxes can absolutely become a sticking point and may cause a property to linger on the market longer than expected. When buyers analyze total carrying costs — purchase price, taxes, insurance and maintenance — an unusually high assess-ment can change the perceived value of the home for some of these buyers. Because of this, I believe educating sellers about the possibility of filing a tax grievance or reassessment review can be extremely valuable, particularly before or during the marketing process. Addressing an inflated assessment proactively can remove a barrier for buyers and strengthen the overall positioning of the property.
In my own experience, I have recommended over the years that sellers explore the grievance process when taxes appeared disproportionately high relative to nearby properties. In every instance where they pursued it, the result was a reduction in their assessed taxes — twice resulting in reductions exceeding $10,000 annually. Beyond the financial benefit, sellers were extremely appreciative of the guidance, and it ultimately made the transaction process smoother by eliminating a concern that buyers might otherwise raise during negotiations.
Ultimately, proactive tax planning can play a meaningful role in a successful sale. When agents help sellers align their property’s tax burden with the broader market, it improves buyer perception of value and helps prevent certain deals from stalling over avoidable financial concerns. For luxury second-home markets like the Hamptons and the North Fork, thoughtful guidance on issues like tax grievances is simply part of providing a higher level of service to both buyers and sellers.
Dawn Watson
THE AGENCY
BRIDGEHAMPTON
The East End has one of the most attractive property tax bases, per resident, in the entire country. That, combined with the lure of our natural resources, quality of life, and perceived rising market value, is why this area continues to be so desirable. Luxury buyers understand the tax benefits to buying here, but they might not know why our taxes are so low. In a nutshell, one double-digit multimillion dollar property can produce the same tax revenue as a couple dozen “regular” homes. That same second-home property generally uses a very small portion of the services (local schools, year-round municipal services, strain on infrastructure, etc.) for which it pays. Generally speaking, that big multimillion dollar property lowers the burden for the rest of the base.
To illustrate how that affects taxes on the East End: a $1 million property owner residing in either Southampton or East Hampton Town typically pays between $4,000 to $8,000 in taxes annually. A $1 million property owner in Brookhaven Town and other places UpIsland pays in the neighborhood of $20,000 annually. Overall, this information about the subsidization of the local tax base generally makes potential buyers even more keen to purchase here.
Judi Desiderio
WILLIAM RAVEIS
EAST HAMPTON
It appears the demographic of today’s buyer doesn’t have sticker shock regarding the real estate taxes — though the con- sensus is, “why are they so high since the services are limited?”
Where their primary home is, the real estate taxes are higher most times, but they have sidewalks, curbs, drains, water, garbage removal etc. — most of which they don’t receive out east. Or maybe they’re just numb to being charged and over charged in New York State.
The taxes that saddle buyers need to be reexamined — the entry level for the 2% Peconic land tax hasn’t been increased since the law passed in 1998. Think about how much property values have increased since then! And now that the median home sale price (MHSP) on the North Fork pierced $1 million and it’s over $2 million on the South Fork, the 1% mansion tax charges most of the home buyers on the East End and that law passed in 1989! A million dollar home was not commonplace back then. Lastly, without any game plan, an additional 0.5% tax is now imposed for “affordable housing.” You get the picture.
Maryanne Horwath
DOUGLAS ELLIMAN
SOUTHAMPTON
Compared to many luxury second-home markets, the East End actually has relatively low property taxes. In a market like Palm Beach, for example, taxes are 2% of a property’s value — meaning a $10 million home could carry around $200,000 a year in taxes.
In Southampton Town, that same property might have taxes closer to $50,000 annually. Hamptons agents really need to understand the nuances of how taxes vary across the East End and be able to educate buyers accordingtly. Taxes can differ significantly depending on the town, village, and school district and high taxes make properties harder to sell, so helping buyers understand those differences are important.
Buyers here can also take issue with our closing taxes — which I playfully refer to as the “initiation tax” of owning in the Hamptons. In the Town of Southampton, property owners can file a grievance each year to lower the assessed value of their home if they have additional information that could lead to a more accurate assessment. I often recommend that homeowners engage profes- sional tax grievance services, which typically work on contingency.
Grievance Day in Southampton is held on the third Tuesday in May. During the week prior, residents may go to the Assessor’s Office in Town Hall, or to the town’s website for assistance with completing the grievance application and/or to help understand how particular assessments were determined. Grievance Day is just before the summer season begins — so everyone tends to be in a pretty good mood!
Ryan Springer
THE CORCORAN GROUP
CUTCHOGUE
Property taxes and rising insurance costs are definitely part of the conversation right now, but I’m finding they impact psychology as much as pricing. Buyers are more payment-focused than ever – especially in the North Fork market – so higher monthly carrying costs can slow momentum or narrow the buyer pool if a property isn’t positioned correctly. Instead of seeing deals fall apart, I’m seeing buyers become more selective and analytical, comparing tax lines and insurance quotes closely before committing. From a listing standpoint, I don’t automatically advise sellers to grieve their taxes prior to going to market. A grievance can be beneficial long-term, but it doesn’t always translate into immediate value or faster negotiations, and timing can complicate disclosures or create unrealistic expectations. My approach is to educate both buyers and sellers on the full cost picture and price strategically within that reality. If a property’s taxes are significantly out of line with comparable homes, I’ll discuss the grievance process as part of a broader strategy — but it’s not a blanket recommendation.
