When selling a house, one of the costs that will vary by location is the real estate conveyance tax. This tax, typically paid by the seller at closing, is based on a percentage of the total sales price of a home.
Sellers in some states pay multiple conveyance taxes, one to the state and another to the town and/or county. In Connecticut, sellers pay a state conveyance tax along with a municipal tax.
It's easy for sellers to be caught off guard by how much they have to pay in conveyance tax at closing, so it’s wise to estimate and budget for it beforehand. Here’s a quick breakdown of how those taxes are calculated.
Connecticut State Conveyance Tax
Connecticut uses a bracketed structure based on the value of the property transferred. The structure is:
- .75% of the first $800,000
- 1.25% on every dollar between $800,000 and $2,500,000
- 2.25% on every dollar above $2,500,000.
For example, someone selling a house for $3 million would pay $38,500 in conveyance tax to the state: ($800,000 x .0075) + ($1,700,000 x .0125) + ($500,000 x .0225).
It’s worth noting that the higher 2.25% rate on values over $2.5 million – dubbed the “mansion tax” – only recently took effect in July 2020.
Connecticut Municipal Conveyance Tax
Municipalities in Connecticut, including Greenwich, collect 0.25% percent of the selling price in conveyance tax for each property sale.
This means a $3 million sale would yield a $7,500 local conveyance tax.
A select group of towns charge a higher rate of .05%. They include Bloomfield, Bridgeport, Bristol, East Hartford, Groton, Hamden, Hartford, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Southington, Thomaston, Waterbury, Windham.
Stamford also imposes rates higher than the .25% base rate. Homes sold for up to $1 million have a conveyance tax of .35%, and homes sold for over $1 million are taxed at .5%.
Exceptions to Conveyance Tax
State law includes some exceptions to the conveyance tax. Some of the notable exceptions include foreclosures, transfers of property between spouses, and sale of property to qualified non-profit entities.
Tax Credit Relief
Connecticut allows taxpayers who pay conveyance tax at the 2.25% rate to claim a property tax credit against their state income tax liability. This credit is based on the amount they paid in conveyance tax at 2.25% rate. Only state residents are eligible for the tax credit under state law.
You can find more information about this tax credit, as well as the state and municipal conveyance tax, in this report from the Office of Legislative Research.
