Every Nantucket closing includes a line item that surprises out-of-state buyers the first time they see it: a check, separate from the purchase price, made out to the Nantucket Islands Land Bank for two percent of what they just agreed to pay. Attorneys explain it the same way every time. It funds conservation land, not the town, not the seller, and it has been part of every arm's-length transaction on the island since 1983.
That fee is well understood by anyone who has bought here before. What is less understood, even among repeat Nantucket buyers, is that a second transfer fee has been trying to join it for more than a decade, has failed every single time it has come up for a vote in Boston, and just failed again this summer. Understanding why it keeps almost passing, and what it would actually cost, matters more to a buyer closing on a $2 million-plus property than most closing checklists let on.
The fee you already know about
The Land Bank fee is straightforward. The purchaser pays two percent of the purchase price at closing, the Land Bank stamps the deed, and the deed can then be recorded at the Registry of Deeds. The program was adopted by Nantucket voters and established by a special act of the Massachusetts Legislature in 1983, and the revenue funds acquisition and management of open space across the island.
There is one meaningful carve-out. First-time home buyers, meaning anyone who has never owned real property anywhere, not just on Nantucket, can exempt a portion of the purchase price from the fee. That exemption has climbed steadily as the island's entry-level prices have climbed with it: $850,000 in 2021, $1,000,000 in 2023, $1,200,000 in 2025, and as of January 2026, the current maximum stands at $1,400,000. The Land Bank Commission resets the number each December based on a review of what an actual starter home costs on the island, which tells you plainly that even the exemption threshold is a running commentary on how far prices have moved.
The exemption comes with conditions. The buyer has to occupy the property as a domicile within a year and remain there for five years. The Land Bank records a lien to enforce it, and if the property sells before that window closes, the exempted fee becomes due immediately, along with interest at 14 percent a year, set by statute. That is not a number to discover after the fact.
The forty-year experiment nobody talks about
Here is the part of the story that gets lost in the debate over whether a second fee would hurt the market. Nantucket has already run that experiment, in public, for four decades. A two percent transfer fee has applied to every sale on this island since 1983, through booms, corrections, and a median single-family price that reached $3.7 million in 2024, the highest in Massachusetts. If a two percent charge at closing were enough to meaningfully suppress a luxury seasonal market, Nantucket's own sales history would show it. It has not stopped anyone from closing here. It has just quietly funded the open space that makes the island look the way it does.
That history is exactly what the state's newest research leaned on when it examined whether a second fee, aimed specifically at funding year-round housing, would behave any differently.
The fee that keeps almost arriving
The proposal under discussion is not an increase to the Land Bank fee. It is a separate mechanism, aimed at a separate problem: Nantucket's shrinking supply of housing for the people who staff its hospitals, schools, and restaurants. In May 2026, the University of Massachusetts Amherst Donahue Institute released a study, commissioned by the Nantucket Planning and Economic Development Commission and the Martha's Vineyard Commission, modeling what a targeted transfer fee could raise. For Nantucket, the version analyzed was a 0.5 percent fee applied only to the portion of a sale price above $2 million, projected to generate somewhere between $3.3 million and $3.9 million a year for workforce housing. Martha's Vineyard's version is structured differently, a 2 percent fee on the portion above $1 million, projected to raise closer to $9.9 million annually there.
To test whether a fee like this actually drives buyers away, the researchers looked at the Peconic Bay region of Long Island, which includes the Hamptons. Towns there have charged a 2 percent transfer fee since 1999 to fund land preservation, and four of those towns added an additional 0.5 percent fee in 2023 specifically for affordable housing. The study found no discernible difference in sales volume or price trends in those towns compared with neighboring communities after the additional fee took effect, a result that mirrors what four decades of Nantucket's own Land Bank fee already suggests.
None of that has been enough to get the proposal through the State House. Nantucket has passed a home-rule petition supporting the fee at Town Meeting nearly every year for over a decade, but state approval is required before any local transfer fee can take effect, and the legislature has declined every time. The most recent attempt died with the legislative session that closed at the end of July 2026. Cape and Islands Senator Julian Cyr, who has pushed the measure for years, put it plainly when the news broke:
"Islanders can't afford to wait another two years for the legislature."
The provision was left out of the Mass Wins Act that passed in July, and Cyr has said the next opportunity will be when the new legislative session opens in January 2027.
Why the opposition doesn't come from where you'd expect
The usual assumption about a transaction fee is that the real estate industry opposes it outright, because any added cost at closing is a cost that could complicate a deal. That assumption breaks down on Nantucket. The statewide Massachusetts Association of Realtors has lobbied against the proposal repeatedly, but the island's own trade group, the Nantucket Association of Real Estate Brokers, supports it. Former NAREB president Penny Dey has traveled to Beacon Hill multiple times to advocate for the fee, and when asked about the statewide association's opposition, her response was direct: "They don't speak for us."
That split is worth sitting with. The people who broker these deals every day, who see firsthand what happens when hospital staff and schoolteachers can't find year-round housing near the island they work on, have concluded that a small fee on the top end of the luxury market is worth the trade. The opposition is coming from a statewide group representing a much broader membership with far less exposure to what a seasonal housing shortage actually does to a local economy.
What this means if you're closing this year
For a buyer under contract right now, nothing about the proposed fee changes what happens at the closing table. Only the Land Bank fee applies, and it has applied the same way since 1983. But because this proposal returns to the legislature almost every year and has come closer each cycle, it is worth building a short mental checklist if you are shopping in the range where it would matter:
- Confirm with your closing attorney exactly what the Land Bank fee will total on your purchase price, and whether any portion of the price qualifies for the first-time buyer exemption at its current $1,400,000 threshold.
- If you are buying through an LLC, trust, or other entity, ask early. The Land Bank requires a separate completed form for each entity involved in a transaction, and it can slow a closing down if it's discovered late.
- If your purchase is above $2 million, it costs nothing to stay aware of where the proposed housing transfer fee stands each legislative cycle, since that is the price band it has specifically targeted in every version analyzed so far.
- Ask your accountant, not your agent, how the Land Bank fee should be treated for tax purposes. It is generally not deductible as an expense but may factor into your cost basis, and that is a conversation for a tax professional, not a closing checklist.
A short FAQ
Does the Land Bank fee apply to every sale? It applies to arm's-length real estate transfers on Nantucket, including leases of 30 years or more. A small number of exemptions exist, including for first-time buyers and certain charitable or religious organizations.
If the proposed housing fee eventually passes, would it apply to a home I've already closed on? No. A fee that doesn't yet exist in law cannot attach to a closing that happened before it was enacted. It would only apply going forward from whatever effective date the legislature eventually sets, if it sets one at all.
Why does the exemption threshold keep changing? The Land Bank Commission reviews recent sale prices of exempted purchases each December and resets the threshold based on what an actual entry-level Nantucket home costs. It has risen every time the Commission has reviewed it since 2021.
Nantucket's real estate math has always had more moving parts than the listing price suggests, and the parts that don't show up on a portal are usually the ones worth understanding before you're sitting at the closing table. If you're weighing a Nantucket purchase and want a clear-eyed read on what you'll actually owe and what's still in motion at the State House, Katie Norton can walk through it with you. Schedule a private consultation.
