Diserio Martin O'Connor & Castiglioni LLP

Connecticut Conveyance Tax Statute Amended to Add Exemptions for Deeds in Lieu of Foreclosure, Short Sales and Foreclosure Sales

July 26, 2010

Conveyance Tax Statute Amended to Add Exemptions for Deeds in Lieu of Foreclosure, Short Sales and Foreclosure Sales 

In the recent one-day special session of the Connecticut General Assembly, Senate Bill No. 501 (now Public Act No. 10-1) extended the current conveyance tax rates to July 1, 2011. 

The Act also amended Connecticut General Statute Section 12-498 to add the following exemptions to the conveyance tax:

"(19) deeds in lieu of foreclosure that transfer the transferor's principal residence; and (20) any instrument transferring a transferor's principal residence where the gross purchase price is insufficient to pay the sum of (A) mortgages encumbering the property transferred, and (B) any real property taxes and municipal utility or other charges for which the municipality may place a lien on the property and which have priority over the mortgages encumbering the property transferred."

The Act also exempts deeds made pursuant to a decree of the Superior Court under Connecticut General Statutes Section 49-24, which includes committee deeds in a foreclosure by sale (as you may recall, Public Act 09-3 had previously made foreclosure sales subject to conveyance taxes).  As with other exemptions set forth in Section 12-498, the new exemptions apply to both state and municipal conveyance taxes. Evidence that the transaction falls within any of these exemptions need not be provided to the town clerk, and Connecticut General Statute Section 12-497 (which prohibits a town clerk from refusing to record any deed if an exemption is claimed under section 12-498 and there is a dispute as to the amount of tax due), will continue to apply to all exemptions.

The Act was signed by the Governor on June 22nd, and the effective date of Section 2 of the Act (which adds the exemptions) is October 1, 2010.

A full copy of the Act can be found at: http://www.cga.ct.gov/2010/ACT/PA/2010PA-00001-R00SB-00501SS1-PA.htm .

For additional information on the Act please contact Charles J. Spiess at cspiess@dmoc.com or (203) 569-1104.

This publication, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Diserio Martin O'Connor & Castiglioni LLP or its attorneys.

IRS Circular 230 Notice:

To ensure compliance with requirements under Treasury Department Circular 230, we inform you that the contents of this publication are not intended or written to be used, and may not be used, for the purpose of (i) avoiding U.S. federal tax penalties or (ii) promoting, marketing or recommending to another party any matter addressed herein.  Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax adviser.