A buyer who closed on 27 Nonantum Avenue in early August wired $12,900,000 for 1.09 acres of vacant land, then wrote a second check for $258,000 before the deed could be recorded. That second check went to an organization most mainland buyers have never heard of: the Nantucket Islands Land Bank. It is not a tax. It is not optional. And on an island where the median transaction now runs into the millions, it has quietly become one of the largest sources of real estate purchasing power on Nantucket itself.
Most closing guides treat the Land Bank fee as a line item to disclose and move past. That undersells what it actually is. The 2 percent fee that every non-exempt buyer pays at closing funds an organization that turns around and competes in the same market you just bought into, sometimes outbidding private buyers for waterfront, sometimes tearing apart the losing side of that competition and rebuilding it as housing stock nobody else on the island is producing. If you are closing on Nantucket this year, the fee is worth understanding as a mechanism, not just a cost.
What Two Percent Actually Costs at the Closing Table
The fee is flat and it does not care what kind of property you are buying. The Nantucket Islands Land Bank's own filing FAQ confirms the purchaser pays 2 percent of the purchase price at transfer, full stop, unless a specific exemption applies. A week of closings tracked by Nantucket Current between July 30 and August 6, 2026 shows how that plays out across very different price points:
| Property | Sale Price | Land Bank Fee |
|---|---|---|
| 27 Nonantum Avenue (vacant land) | $12,900,000 | $258,000 |
| 247 Polpis Road (4.25-acre estate) | $7,675,000 | $153,500 |
| 42 Vestal Street (in-town cottage) | $2,725,000 | $54,500 |
| 16 Allens Lane, Lot 1 | $1,550,000 | $31,000 |
None of these buyers qualified for an exemption. The fee scaled exactly the way the statute says it should, whether the purchase was raw land, a Sconset-adjacent estate, or a modest in-town lot. If you are budgeting for a Nantucket closing and the Land Bank fee is not already in your worksheet as its own line, it should be, and it should be calculated against your actual offer price, not a rough estimate.
The Exemption Keeps Climbing Because the Market Won't Slow Down
The Land Bank Commission reviews the first-time buyer exemption every year, and the pace at which it has had to raise that threshold tells its own story. The exemption sat at $400,000 for years before the Commission moved it to $500,000 in 2016. It held there for five years before jumping to $850,000 in March 2021. From there the gaps between increases started shrinking: $1,000,000 as of January 2023, $1,200,000 as of January 2025, and $1,400,000 as of January 2026, according to the Land Bank's current filing guidance.
Read as a sequence, that is a five-year gap, then a two-year gap, then a two-year gap, then a one-year gap. The Commission is not raising the exemption on a schedule. It is chasing a market that keeps outrunning last year's number. A first-time buyer who qualifies today keeps roughly $28,000 that would otherwise go to the fee, up from about $17,000 in early 2021. That is not a rounding change. It is the Commission publicly acknowledging, once a year, that its own definition of an entry-level Nantucket purchase has moved again.
The Fee Turned the Land Bank Into a Buyer, Not Just a Toll Collector
Here is the part that most closing checklists skip entirely. The Land Bank does not sit on the fee. It spends it, aggressively, in the same market you are trying to buy into.
In November 2024, the Land Bank closed on 41 Jefferson Avenue, a one-acre beachfront compound on the north shore next to the Galley restaurant and the Cliffside Beach Club, for $26 million, its most expensive acquisition ever. The property had originally been listed at $39 million. At the time of that purchase, the Land Bank had already collected $22.2 million in fee revenue for the year and still had $11.4 million in uncommitted funds left over afterward.
What happened next is the part worth knowing if you are trying to understand where your own fee is going. In May 2026, the Land Bank moved three structures off that Jefferson Avenue property, physically, down Easton Street, up Cliff Road, out to a town-owned parcel at 158 Madaket Road that the Affordable Housing Trust had purchased for $2 million the month before. National Grid and Verizon crews helped clear the route. The buildings are being renovated into two two-bedroom homes and one four-bedroom home, to be sold through a lottery to households earning up to 150 percent and 240 percent of the island's area median income.
That is the actual life cycle of the fee. A buyer pays 2 percent at closing. The Land Bank uses collected fees to outcompete private buyers for prime waterfront. The structures on that waterfront get relocated and converted into deed-restricted homes for island workers who could otherwise never buy in. Your closing check is not a toll on the way into the market. It is capital for an organization actively shaping what gets built, preserved, or converted next.
The Other Transfer Fee Everyone Keeps Confusing With This One
There is a second, entirely separate transfer fee proposal that keeps showing up in Nantucket real estate headlines, and it is easy to conflate with the Land Bank fee you are actually required to pay. It is not the same thing, and as of this writing, it does not exist.
For more than a decade, Nantucket's state representatives have pushed a local-option transfer fee, most recently a proposed 0.5 percent fee on the portion of sales above $2 million, to fund a housing bank modeled on the Land Bank but dedicated to workforce and affordable housing. A May 2026 study from the UMass Amherst Donahue Institute, commissioned by the Nantucket Planning and Economic Development Commission and the Martha's Vineyard Commission, estimated the fee could generate roughly $3.3 million a year for Nantucket without meaningfully suppressing sales or prices. The Nantucket Association of Real Estate Brokers has backed it. State Senator Julian Cyr and Representative Thomas Moakley have carried it session after session.
It has also failed every single time, including again during the legislature's formal session that closed in early August 2026, as Cape and Islands public radio reported. The Massachusetts Association of Realtors has lobbied against it consistently, and the state legislature has never let a Nantucket home rule petition on this issue reach a final vote. Any transaction closing on Nantucket right now is subject only to the existing 2 percent Land Bank fee. The workforce housing fee is a live political fight, not a line item on your closing statement, and if it ever does pass it would need separate state authorization before it applies to any sale.
What to Actually Budget For This Year
Three details matter more than the headline rate if you are closing soon.
The fee is paid at closing by check made out to the Nantucket Islands Land Bank, added to your settlement by your attorney, and the deed cannot be recorded at the Registry of Deeds until the Land Bank stamps it. Build that into your timeline expectations, not just your budget.
If you are purchasing through an LLC or trust, which is common on Nantucket for privacy and estate planning, the first-time buyer exemption may not be available to you. The exemption form requires the purchaser's own certification and cannot be signed by an attorney on the purchaser's behalf, and it is tied to an individual who has never held a real property interest anywhere, not an entity. Talk to your closing attorney early if you are weighing entity ownership against exemption eligibility.
If you do claim the exemption, the Land Bank records a lien against the property to enforce the five-year ownership and domicile requirement. Sell or stop occupying the home before that window closes, and the exempted fee becomes due immediately along with 14 percent annual interest, set by statute, plus penalties. The fee itself is not tax deductible, but it can be added to your cost basis, which reduces taxable gain whenever you eventually sell.
FAQ
Does buying through an LLC disqualify me from the first-time buyer exemption? Generally yes. The exemption requires the purchaser to personally certify they have never owned real property anywhere, and the Land Bank's own forms specify that attorneys cannot sign the first-time buyer exemption form on a purchaser's behalf. Entity purchases typically do not qualify.
Is the Land Bank fee tax deductible? No. The Land Bank fee is classified as a fee rather than a deductible expense, but it can be added to your property's cost basis, which lowers your taxable gain when you eventually sell.
What happens if I sell within five years of claiming the exemption? The exempted portion of the fee becomes due immediately, along with 14 percent annual interest and any applicable penalties. A lien is recorded against the property at the time of purchase specifically to enforce this.
Is there a second transfer fee about to be added to Nantucket closings? Not currently. A separate 0.5 percent workforce housing transfer fee has been proposed for over a decade and failed again in the state legislature's 2026 session. It would require state authorization that has not yet been granted, and it has no effect on any closing happening today.
Nantucket's closing costs are not just a checklist item to get past. They are a window into how the island actually manages growth, one transaction at a time. If you are weighing a purchase or a sale here and want the numbers run against your specific price point, exemption eligibility, and timeline, Matthew Winterle can walk through what it looks like for your transaction.
