The bid by Newburgh residents to take over the ownership of Lochmill reservoir and the surrounding land received a major boost with the Scottish Land Fund offering to meet 95% of the purchase price.
Residents in Newburgh have been awarded £51,925 to buy the former town reservoir.
Andrew Arbuckle, the chairman of Newburgh Community Trust, said: “This is very good news. They must have recognised the very strong support for the project revealed when we held at ballot over the proposal.
He added that a great deal of the credit for the successful bid had to go to Fife Voluntary Action whose officers had helped prepare the business case for the project.
He added: “They have helped guide the project from the start. They have filled in forms and generally kept us on the right road.”
He also paid tribute to all those who had supported the bid in the past eight years following the first registration under the Community Right to Buy legislation.
Mr Arbuckle said that there were still a number of hurdles to cross before the property came into the ownership of the trust.
These related to finding the balance of the cash and getting the documentation completed before the Scottish Government deadline date of mid-May for the transfer.
The Scottish Land Fund announcement came from First Minister Nichola Sturgeon on Monday.
Residents of Culbokie, on the Black Isle, will also receive £96,691 to buy local land for community uses.
This means total funding of over £6.5 million capital and £850,000 revenue has been awarded since June 2012.
Ms Sturgeon said: “The land and people who form part of a community can often be its best and most valuable assets. “Owning their land can help realise their aspirations and dreams, make a real difference to long term sustainability and build stronger, resilient and supportive communities.
“When land is locally owned and managed for the good of the community, people reap the benefits.
“That’s why I am pleased that an average of one community a month has been helped to buy land since the land fund opened with two more communities now set to follow in these footsteps.”
Rural Affairs Secretary Richard Lochhead said: “Land reform has already delivered significant benefits to rural communities across Scotland.
“How we manage rights over land in Scotland determines the benefits our land can bring to our economy and our communities, as we can see from examples such as Aigas Community Forest.
“Many communities across Scotland are already benefitting from owning their own land.
“I’m pleased that residents of Newburgh, Fife and the Black Isle village of Culbokie will be the latest to benefit from the Scottish Land Fund, which will allow them to realise their dreams of bringing land under community control and deliver the wider aspirations of their communities.
“We want to build on this progress and that’s why we’ve recently consulted on a number of proposals to improve the fairness of our system of land ownership in Scotland and will bring forward legislation in the Land Reform Bill in this parliament.”