Selling a home in Connecticut comes with a cost that many sellers don’t fully account for until they’re sitting at the closing table. The Connecticut real estate conveyance tax is a transfer tax paid on the sale of real property, and for high-value transactions, especially in areas like Greenwich, Darien, and New Canaan, it can represent a significant sum. Knowing what to expect well in advance can help you plan and protect your proceeds.
At Mandelbaum Barrett PC, our Connecticut residential real estate attorneys have decades of experience guiding buyers and sellers through every aspect of the closing process, including navigating the tax obligations that come with it. Partner Michael J. Jones serves as General Counsel to the Greenwich Association of Realtors.
Who Pays the Conveyance Tax?
In Connecticut, the conveyance tax is generally paid by the seller at the time of closing. It is due when the deed is recorded with the town clerk, and the sale cannot be finalized without it. According to the Connecticut Department of Revenue Services, tax will be due on any transfer where the consideration equals or exceeds $2,000, unless an exemption applies. As a seller, budgeting for this cost ahead of listing your property is an important part of accurately projecting your net proceeds.
How Connecticut’s Conveyance Tax Is Calculated
Connecticut’s conveyance tax is actually made up of two separate taxes: a state conveyance tax and a municipal (local) conveyance tax. Both are calculated based on the final sale price of the property.
The State Conveyance Tax
The state uses a tiered, bracketed structure for residential properties. The first $800,000 of the sale price is taxed at 0.75%. The portion of the sale price between $800,000 and $2,500,000 is taxed at 1.25%. Any portion exceeding $2,500,000 is taxed at 2.25%. This means that for a $3 million sale, the state conveyance tax alone would total $38,500, calculated across all three tiers.
The Municipal Conveyance Tax
In most Connecticut towns, including Greenwich, the local conveyance tax is 0.25% of the total sale price. A small group of municipalities designated as “targeted investment communities” are permitted to charge double that rate, up to 0.50%. These towns include Bridgeport, Hartford, New Haven, Norwalk, Stamford, Waterbury, and several others. For a property in Greenwich selling at $3 million, the municipal tax would add another $7,500, bringing the combined total to $46,000.
Common Exemptions to Be Aware Of
Not every transfer is subject to the conveyance tax. Connecticut law provides exemptions that can apply in specific circumstances, and sellers should review these carefully before closing. The following are some of the more commonly encountered exemptions:
- Transfers between spouses: Conveyances between married individuals, including those made as part of a divorce settlement, are generally exempt from both state and municipal conveyance taxes.
- Foreclosure sales: Properties transferred through a court-ordered foreclosure by sale are exempt from the conveyance tax.
- Sales to qualifying nonprofits: Transfers of property to a qualified tax-exempt organization may be eligible for an exemption.
- Low-consideration transfers: Sales where the purchase price is below $2,000 are not subject to the tax.
Because the Connecticut Department of Revenue Services places the primary burden of conveyance tax compliance on closing attorneys, it is important to work with legal counsel who can accurately assess whether any exemption applies to your specific transaction and document it correctly.
The High-Value Tax Credit
One important benefit available to sellers in Connecticut is the real estate conveyance tax credit. Sellers who pay conveyance tax at the 2.25% rate, which applies to the portion of a sale price that exceeds $2,500,000, may be eligible to claim a credit against their Connecticut income tax liability.
This credit can be carried forward if it is not fully used in the tax year of the sale, making it especially relevant for sellers of high-value properties in markets like Greenwich and Darien where $3 million, $5 million, or even $10 million transactions are common. Our tax attorneys at Mandelbaum Barrett PC can help you understand how this credit may apply to your situation and ensure it is properly claimed.
Why Having the Right Closing Attorney Matters
The conveyance tax is filed using Form OP-236, the Connecticut Real Estate Conveyance Tax Return, and must be submitted to the town clerk at the time of recording. Errors in calculating the tax, failing to claim a valid exemption, or missing required attachments can delay your closing or result in penalties. For sellers in Connecticut’s most active luxury real estate markets, the stakes are high enough that working with an attorney who has handled hundreds of these transactions is well worth it.
Mandelbaum Barrett PC Is Here for Your Connecticut Closing
Selling a home in Connecticut, particularly in Fairfield County’s luxury market, involves financial decisions that deserve careful attention. Our team is deeply familiar with the nuances of Connecticut real estate law and the specific demands of the Greenwich, Darien, and New Canaan markets, where no detail at the closing table goes unnoticed.
With offices throughout Connecticut and New Jersey and a track record that includes the most expensive residential closings in Greenwich history, our attorneys bring the experience and precision that high-value transactions demand. To speak with a member of our Connecticut residential real estate team, contact us today and let us help you prepare for a smooth, informed closing.