Connecticut Homesellers take note! Conveyance tax increase to begin July 1, 2011

ALERT:  The Biennium Budget Bill for 2012-2013 (Senate Bill #1239, Section 102) was just signed into law by Connecticut Governer Dannel P. Malloy. The Bill includes a .25 percent increase to the Real Estate Conveyance tax .

A synopsis of the new State Conveyance tax as of July 1, 2011 is as  follows (This is when you SELL your home) : ALSO NOTE: Your homeowner property taxes will change as of July 1, 2011 through June 31, 2012. Read this article to find your new mill rate.

• Residential property (and vacant land) will  be taxed at .75 percent or .0075 (instead of one half of of one percent).
• Residential property that is conveyed for more than $800,000  will be taxed at .75 percent or .0075 up to $800,000, and the balance of the sales price at 1.25 percent .
• Non-residential property will be   taxed at 1.25 percent, instead of one percent.
• Property conveyed by a delinquent mortgagor to a financial institution of property on which mortgage payments have been delinquent for not less than six months will be taxed at .75 percent or .0075.

Excerpted from OLR Bill Analysis  SB 1239-§§ 102 & 103 — 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 transaction. The combined rate is applied to the sale price.

The current state tax is 0. 5% of (1) the first $ 800,000 of the sale price of a residential property and (2) the full sale price of unimproved land and certain bank foreclosures for mortgage delinquencies. A 1% rate applies to (1) sales of nonresidential property other than unimproved land and (2) any portion of the sale price of a residential dwelling that exceeds $ 800,000 (the so-called “mansion tax”). The bill increases these rates to 0. 75% and 1. 25%, respectively.
In addition to the state tax, a seller must pay a state-specified conveyance tax to the municipality where the property is located. The current municipal tax rate is 0. 25% for all towns plus an additional tax of up to 0. 25% in 18 eligible towns that choose to impose the increased rate. Thus, under current law, the municipal tax rate can range from 0. 25% to 0. 5%, depending on where the property is located."

It is somewhat unclear in the bill as to when the conveyance will be deemed to have occurred. I would advise speaking to your attorney for clarification as to which specific date would be accurate-  contract,  deed,  closing or recording, as it WILL MAKE A DIFFERENCE.  

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