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Connecticut General Assembly
Office of Legislative Research
Stephanie A. D’Ambrose, Director
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Room 5300
Legislative Office Building
Real Estate Conveyance Tax
By: Rute Pinho, Chief Analyst
July 9, 2020 | 2020-R-0020
Issue
Explain Connecticut’s real estate conveyance tax. This report updates OLR Report 2017-R-0107.
Summary
State law generally requires a person who sells real property for at least $2,000 to pay a tax on the
property’s conveyance. The tax has a state and municipal component and ranges from 1% to 2.75%
of the sales price, depending on the property type and the municipality in which the property is
located. The seller must pay the tax before the deed can be recorded.
Connecticut also imposes a 1.11% controlling interest transfer tax on real estate transferred
through the sale or transfer of a business entity that owns an interest in Connecticut real property
valued at least $2,000 or more. The tax is designed to apply to real estate transfers that are not
subject to the conveyance tax because there is no change in the property’s deed.
Connecticut’s Real Estate Conveyance Tax
The real estate conveyance tax has two parts: a state tax and a municipal tax. The applicable state
and municipal rates are added together to get the total tax rate for a particular property
conveyance. The combined rate is applied to the property’s sales price. The seller pays the tax
when he or she conveys the property. Municipal town clerks collect the tax and remit the state
share to the state Department of Revenue Services (DRS) (CGS §§ 12-494 et seq., as amended by
PA 19-117, § 337).
2017-R-0107
July 9, 2020
Page 2 of 4
State Tax
Table 1 lists the state tax rates by property type. The rate is 0.75% of (1) the first $800,000 of the
sales price of a residential dwelling (i.e., single family home or condominiums); (2) the full sales
price of residential property other than residential dwellings (e.g., apartment buildings) and
unimproved land (including farm, forest, and open space land); and (3) the amount of unpaid
mortgage and interest on a property conveyed to a financial institution by a delinquent mortgagor.
A 1.25% rate applies to (1) sales of
nonresidential property other than
unimproved land and (2) any portion of
the sales price of a residential dwelling
that exceeds $800,000 and is less than
or equal to $2.5 million.
Beginning July 1, 2020, a 2.25% rate
applies to any portion of a residential
dwelling’s sales price that exceeds $2.5
million. However, certain taxpayers may
qualify for a state income tax credit for
the amount paid at the 2.25% rate, as
described further below.
Municipal Tax
The municipal tax can range from 0.25% to 0.5%, depending on the municipality in which the
property is located. The base rate is 0.25% for all municipalities, plus an additional tax of up to
0.25% if the property is located in an eligible municipality that has chosen to impose the increased
rate. Table 2 lists the 19 municipalities eligible to adopt
the increased rate, which comprise the 18 "targeted
investment communities" and a municipality with a
manufacturing plant that qualifies for enterprise zone
benefits (i.e., Bloomfield).
With the exception of Groton, Stamford, and Thomaston,
all of the eligible municipalities impose the maximum
0.25% additional conveyance tax. Stamford imposes an
additional tax of (1) 0.10% on properties sold for up to
$1 million and (2) 0.25% on all other properties. Groton
and Thomaston do not impose the additional tax.
Table 1: State Conveyance Tax Rates by Property Type
Property Type
State
Rate
Unimproved land
0.75%
Residential dwelling (portion of sales price ≤ $800,000)
Other residential property
Property conveyed by a delinquent mortgagor
Nonresidential property (excluding unimproved land)
1.25%
Residential dwelling (portion of sales price > $800,000
and ≤ $2.5 million)
Residential dwelling (portion of sales price > $2.5
million)
2.25%
Eligible Municipalities
Bloomfield
Bridgeport
Bristol
East Hartford
Groton
Hamden
Hartford
Meriden
Middletown
New Britain
New Haven
New London
Norwalk
Norwich
Southington
Stamford
Thomaston
Waterbury
Windham
2017-R-0107
July 9, 2020
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Exemptions
The law exempts various types of transactions from the state and local tax, including the following:
1. transfers between spouses;
2. conveyances pursuant to certain court decrees, including as a result of (a) an annulment,
dissolved marriage, or legal separation or (b) foreclosure by sale;
3. transfers of property to any nonprofit organization organized to hold undeveloped land in
trust for conservation or recreation purposes;
4. deeds made pursuant to corporate mergers;
5. transfers of a principal residence where the gross purchase price is less than the total
amount the seller owes on the property for mortgages and tax liens (i.e., “short sales’); and
6. transfers of certain principal residences with concrete foundations that have deteriorated
due to the presence of pyrrhotite (CGS § 12-498, as amended by PA 19-117, § 336).
A full list of conveyance tax exemptions is available in DRS’s conveyance tax return instructions.
Revenue
The state collected approximately $200.8 million in state conveyance tax revenue in FY 19, up from
$195.4 million in FY 18 and $191.6 million in FY 17 (DRS FY 19 Annual Report, pg. 70).
Municipalities collected $62.7 million in FY 18 (according to the Office of Fiscal Analysis).
Property Tax Credit Against the Income Tax
Beginning with the 2021 tax year, taxpayers who paid conveyance tax at the 2.25% rate may claim
a property tax credit against their state income tax liability based on the amount they paid in
conveyance tax at this rate. Taxpayers who claim the property tax credit on this basis are not
subject to the credit’s income eligibility limits or $200 maximum. By law, eligibility for the property
tax credit is limited to state residents.
Taxpayers may use the conveyance tax payment as the basis for the property tax credit for three
years, beginning in the third tax year after the year in which the taxpayer paid the conveyance tax.
The credit in each year cannot exceed 33.3% of the amount of conveyance tax the taxpayer paid at
the 2.25% rate. If a taxpayer does not use the full credit in a given year because it exceeds what
the taxpayer owes in income tax or paid in property tax, then the taxpayer may carry the unused
portion forward for up to six successive tax years.
2017-R-0107
July 9, 2020
Page 4 of 4
Controlling Interest Transfer Tax
The controlling interest transfer tax is designed to apply to transfers of real property that are not
covered by the real estate conveyance tax. It applies when Connecticut real estate valued at
$2,000 or more is transferred through the sale or transfer of a controlling interest (i.e., more than
50%) of the business entity (e.g., corporation, partnership, association, or trust) that owns the
property. Because such transfers are due to the transfer of interests in the property, rather than the
transfer of a deed, the conveyance tax does not apply to them. The tax rate is 1.11% of the
property’s “present true and actual value”; the state remits 0.11% to the municipality in which the
property is located and keeps the remaining 1% (CGS §§ 12-638a et seq.).
In FY 19, the state collected approximately $12.4 million from the tax, up from $7.1 million in FY
18, but down from $18.4 million in FY 17 (DRS FY 19 Annual Report, pg. 22).
RP:kc