Connecticut Conveyance Tax: What Sellers Pay and Where It Costs the Most

Investors who carefully model their Connecticut purchase costs but ignore the exit often discover at closing that the conveyance tax has consumed $10,000 to $20,000 of their projected profit. Connecticut's transfer tax system is bifurcated — a state tax and a municipal tax — and in the exact markets where investors chase cash flow, both components are elevated above the baseline rate.

This is not a tax that can be negotiated or avoided by structuring. It is a statutory obligation assessed at closing on the gross consideration paid, and it comes directly out of the seller's proceeds.

The Two-Part Connecticut Conveyance Tax System

Connecticut assesses two separate conveyance taxes on every property transfer:

1. State Conveyance Tax: Collected at the state level, rates vary by property type and sale price.

2. Municipal Conveyance Tax: Collected at the local level, the base rate is 0.25% but doubles to 0.50% in designated Targeted Investment Communities (TICs).

Both taxes are customarily paid by the seller at closing, deducted directly from sale proceeds. The closing attorney calculates both amounts on Form OP-236 (the Connecticut Real Estate Conveyance Tax Return) and remits the funds simultaneously with deed recording.

State Conveyance Tax Rates by Property Type

The state conveyance tax rate depends on how the property is classified:

Residential Dwelling (single-family homes, condominiums, cooperative units):

• First $800,000 of sale price: 0.75%
• $800,001 to $2,500,000: 1.25%
• Above $2,500,000: 2.25% (the "mansion tax")

Multi-Family and Apartment Buildings (duplexes, triplexes, apartment complexes):

• Flat rate on the full sale price: 0.75%
• No escalating brackets — the multi-family classification caps the rate at 0.75% regardless of price

Commercial / Non-Residential Property:

• Flat rate on the full sale price: 1.25%

The distinction between "residential dwelling" and "multi-family" is significant for investors. A two-family home that you flip for $950,000 sells as a multi-family property at a flat 0.75% — the 1.25% bracket that would apply to a single-family home at the same price does not apply. That's a $1,250 savings in state tax that many investors miss because they assume all residential property falls under the tiered residential structure.

Municipal Conveyance Tax: The Targeted Investment Community Premium

The municipal conveyance tax applies on top of the state tax. In most Connecticut towns, the rate is 0.25%. But 18 municipalities — plus one enterprise zone (Bloomfield) — are designated as Targeted Investment Communities and are authorized to double this rate to 0.50%.

The Targeted Investment Communities include Connecticut's primary cash-flow investment markets:

• Bridgeport
• Hartford
• New Haven
• Waterbury
• Stamford (with a hybrid rate: 0.35% up to $1,000,000, then 0.50% on amounts above)
• Norwalk
• New London
• Norwich
• West Haven
• Windham

The full TIC list is defined by statute and updated periodically. If you're buying or selling in any of the major urban investment markets in Connecticut, assume the 0.50% municipal rate applies until you verify with the closing attorney.

Total conveyance tax burden in a TIC on a standard residential sale under $800,000: 1.25% (0.75% state + 0.50% municipal)

Calculating Your Conveyance Tax Bill

Example 1: $500,000 multi-family sale in New Haven (TIC)

• State tax: $500,000 × 0.75% = $3,750
• Municipal tax (TIC): $500,000 × 0.50% = $2,500
• Total: $6,250

Example 2: $500,000 multi-family sale in Middletown (standard town)

• State tax: $500,000 × 0.75% = $3,750
• Municipal tax (standard): $500,000 × 0.25% = $1,250
• Total: $5,000

Example 3: $1,000,000 single-family sale in Greenwich (standard town)

• State tax: $800,000 × 0.75% + $200,000 × 1.25% = $6,000 + $2,500 = $8,500
• Municipal tax (standard): $1,000,000 × 0.25% = $2,500
• Total: $11,000

Example 4: $1,000,000 single-family sale in Bridgeport (TIC)

• State tax: $800,000 × 0.75% + $200,000 × 1.25% = $6,000 + $2,500 = $8,500
• Municipal tax (TIC): $1,000,000 × 0.50% = $5,000
• Total: $13,500

The TIC premium on a $1,000,000 sale adds $2,500 to the total bill. On a $500,000 sale, it adds $1,250. Over a portfolio with several exits, the TIC premium accumulates into a material cost.

The LLC Exemption: One Important Exception

Connecticut General Statutes Section 12-498 contains a notable exemption: the transfer of real property from an individual to a single-member LLC where the transferor is the sole member of the LLC is completely exempt from both the state and municipal conveyance tax.

This is a significant structural planning opportunity. An investor who acquires a property personally and then transfers it to a single-member LLC for liability protection avoids the conveyance tax on that transfer. On a $500,000 property in a TIC, that exemption saves $6,250 in conveyance taxes.

The exemption applies only to individual-to-single-member-LLC transfers where the individual is the LLC's only member. Transfers from one LLC to another, or from an individual to a multi-member LLC, do not qualify for this specific exemption.

The Proposed LLC Penalty: Legislative Risk to Watch

A separate legislative proposal — Senate Bill 266 — has proposed dramatically increasing the conveyance tax rate for purchases made by non-individual entities such as LLCs or corporations. Under this proposed structure, the base rate for entities would jump to 1.75% on the first $800,000 and 2.25% above that threshold.

This bill has not passed as of mid-2026, but it has been introduced and debated. If enacted, it would directly penalize the standard investment vehicle that Connecticut real estate investors rely on for asset protection, potentially adding $5,000 to $10,000 to the tax burden on a typical investment acquisition.

Investors structuring new purchases through LLCs should monitor this legislation. If SB 266 advances, the cost-benefit analysis of purchasing in an LLC versus personally (with subsequent transfer to an LLC) shifts significantly.

Conveyance Tax vs. Non-Resident Withholding: Two Separate Obligations

For out-of-state investors, the conveyance tax at closing is accompanied by a second, separate obligation: mandatory income tax withholding at 6.99% of net proceeds for non-resident sellers. These are not the same thing:

• Conveyance tax: Transfer tax assessed on the gross sale price, paid by the seller to the municipality and state. Not credited against income tax.
• Non-resident withholding: Estimated income tax withheld from net proceeds, credited against your Connecticut tax liability when you file your non-resident return (Form CT-1040NR/PY) at year end.

On a $600,000 multi-family sale in Hartford with a $200,000 mortgage remaining:

• Conveyance tax: ($600,000 × 0.75%) + ($600,000 × 0.50%) = $3,750 + $3,000 = $6,750 (comes off top)
• Non-resident withholding: $400,000 net proceeds × 6.99% = $27,960 (credited against income tax)

Both come out of your proceeds at closing. Only the withholding is creditable against income taxes — the conveyance tax is simply gone.

Building Conveyance Tax Into Your Return Model

Every Connecticut investment underwriting should include a line item for conveyance tax as a disposition cost alongside capital gains taxes, broker commissions, and closing costs. A simple rule of thumb for most investment properties:

• Standard town: Budget 1.0% of the sale price (0.75% state + 0.25% municipal)
• Targeted Investment Community: Budget 1.25% of the sale price (0.75% state + 0.50% municipal)
• Large single-family or condo over $800K in a TIC: Add the escalating bracket calculation

At a 5-year hold on a $400,000 multi-family in a TIC, with a projected sale at $520,000, your conveyance tax exit cost is $6,500. That's not catastrophic — but it's real money that reduces the return you show your partners or report on your depreciation schedule.

The full Connecticut disposition economics — conveyance tax, non-resident withholding, 1031 exchange mechanics, and Form OP-236 filing — are covered in the Connecticut Investment Property Guide.

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