The occasion of the sale of 499 Indian Field Road, “Copper Beech Farm” for $120,000,000 and it’s attendant conveyance tax* of $1,796,000 provides us with an opportunity to show how this (insidious, deliberately confusing, so-called) tax works…
Here is the state of CT’s real estate conveyance tax, in it’s two parts:
State: .75% of the first $800,000 and 1.25% on amounts above $800,000.
Local: .250% of the total sales price.
So in the case of this landmark $120,000,000 sale, you calculate thusly….
For the state, you take that first $800,000 and multiply by .0075 to get $6,000. For the balance ($119,200,000), you multiply by .0125 to get $1,490,000. Total for the state, therefore is $6,000 plus $1,490,000 or $1,496,000.
For the Town’s take, you multiply the entire total of $120,000,000 by .00250 to get $300,000.
Sell for $1,000,000:
State gets .0075 of the first $800,0000, which is always $6,000. The $200,000 balance is multiplied by .0125 to get $2,500.
Town gets .0025 times $1,000,000 equaling $2,500.
Total conveyance tax = $11,000.
Sell for $2,000,000:
State = $6,000 + $15,000
Town = $5,000
Total conveyance tax: $26,000.
Sell for $3,000,000
State = $6,000 + $27,500
Town = $7,500
Total conveyance tax: $41,000.
And so on…
* In their never-ending quest to drive productive citizens out of Connecticut, Hartford liberals, beginning in 1989, began the steady raising of the conveyance tax every few years. Since it applies to all sales, even in cases where the seller may be losing hundreds of thousands, even millions of dollars, it is more accurately described as a real estate sales penalty. Don’t like it? Stop voting for liberals!