Selling residential property comes with conveyance tax, or a tax on the transfer of property. This tax is paid by the seller, unless otherwise noted in the purchase agreement. In Connecticut, there is a conveyance tax at both the state and municipal level. Municipal town clerks collect the entire conveyance tax and give the state portion to the Department of Revenue Services.
State Conveyance Tax
Connecticut bases its state conveyance tax on the value of the property. For residential real estate property that is sold for less than $800,000, the tax is 0.75%. The tax increases to 1.25% for any amount exceeding $800,000.
For example, if someone sells a home in Connecticut for $400,000, state conveyance tax would be as follows:
- Conveyance tax at .75% of $400,000 ($400,000 x .0075) = $3,000
If someone sells a home in Connecticut for $900,000, state conveyance task increases:
- Conveyance tax at .75% of $800,000 ($800,000 x .0075) = $6,000
- Conveyance tax at 1.25 of remainder ($100,000 x .0125) = $1,250
- Total conveyance tax = $7,250
Municipal Conveyance Tax
In addition to the state conveyance tax, there is a municipal conveyance tax for each town. Most towns in Connecticut have a municipal tax of .25%. Since 2011, 18 CT towns have been permitted to raise the municipal conveyance tax up to .5%. These are towns targeted as investment communities and have a qualified manufacturing plant. All 18 towns have elected to raise their municipal tax rate: Bloomfield, Bridgeport, Bristol, East Hartford, Groton, Hamden, Hartford, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Southington, Stamford, Waterbury, and Windham.
For someone who sells a $500,000 home in most CT towns:
- Municipal tax at .25% of $500,000 ($500,000 x .0025) = $1,250
For someone who sells a $500,000 home in one of the 18 towns listed above:
- Municipal tax at (up to) .5% of $500,000 ($500,000 x .005) = $2,500
Simply add your municipal tax and state tax to find your total conveyance tax.
There are certain instances where a transfer of property is exempt from conveyance tax. These include a transfer of property between spouses, sales to qualified non-profit entities, and foreclosures.
Have more questions about the conveyance tax on the property you are selling?