CT To Introduce New “Mansion Tax” In 2020 For High-End Real Property Sales

As of July 1, 2020, Connecticut will impose a “Mansion Tax” equal to a 2.25% tax on any sale of real property exceeding $2,500,000.00. This Mansion Tax applies to the portion of the sale price in excess of $2,500,000.00 and is an increase from the prior tax rate of 1.25%. Aside from this change, state conveyance taxes remain the same: .75% on the first $800,000.00; 1.25% on the next $1,700,000.00.  

Under the new law, sellers who continue to reside in Connecticut will receive an income tax credit for the amount of tax paid at the 2.25% tax rate.  Sellers will be allowed to take a credit equal to 1/3 of the tax paid at the 2.25% rate each year for three years, beginning three years after the sale.  In order to receive the full amount of the credit, sellers will have to reside in Connecticut for at least six years following the sale.

Sellers should note that there are state conveyance taxes and local conveyance taxes to be paid upon closing. The Mansion Tax discussed above applies to state conveyance taxes. Local conveyance taxes differ by town. If you are planning on selling a home, you will want to take both state and local conveyance taxes into account.  For more information, please contact Alyssa M. Vesco (avesco@brodywilk.com) or another BW attorney.

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