What is the transfer tax in Connecticut?
Connecticut calls it the real estate conveyance tax, and it has two parts under C.G.S. 12-494. The state portion is 0.75% of the consideration. The municipal portion is 0.25%, and every town collects it. The tax applies to conveyances with consideration of $2,000 or more.
Two kinds of property pay more on the state side. Property used for anything other than residential use, except unimproved land, pays 1.25%. And a residential estate, meaning a primary dwelling plus any auxiliary housing or structures, pays a marginal rate: 0.75% up to $800,000, 1.25% from $800,000 to $2,500,000 and 2.25% above $2,500,000.
An apartment building fits neither higher class. The Department of Revenue Services’ instructions for Form OP-236 put apartment buildings, duplexes, nursing homes and other multi-unit properties on their own line as residential property other than a residential dwelling, whether or not the owner lives there. A 2020 report by the legislature’s Office of Legislative Research says the same thing: apartment buildings pay 0.75% of the full price.
Why Connecticut apartment buildings skip the mansion tax
The 2.25% top tier, in effect since July 1, 2020, is aimed at high-end houses. Because the statute ties the tiers to a residential estate rather than to any residential property, a 40-unit building selling for $8 million pays the flat 0.75% state rate on every dollar.
The gap gets large fast. On a $5,000,000 sale, the state portion is $37,500 for an apartment building. A $5,000,000 single-family house pays $6,000 on the first $800,000, $21,250 on the next $1,700,000 and $56,250 on the last $2,500,000, for $83,500 to the state. Add the town’s 0.25% and the house owes $96,000, while the apartment building owes $50,000.
Mixed-use buildings need a closer look. The OP-236 instructions classify property by the use that a preponderance of the square footage is devoted to. A building that’s mostly apartments with ground-floor retail is generally residential. One where the commercial space is the bigger share can be pushed into the 1.25% nonresidential rate, which on $5,000,000 is $62,500 to the state.
Who pays transfer tax in Connecticut, and when?
The seller. C.G.S. 12-495 makes the tax payable by the person conveying the property when the deed is recorded, and it’s paid to the town clerk where the property sits. The clerk won’t record the deed without the return and payment.
The return is Form OP-236, the Connecticut Real Estate Conveyance Tax Return. In towns that take electronic filing, your closing attorney files and pays through myCTREC. Elsewhere, both pages of the paper return go to the town clerk with a check to the Commissioner of Revenue Services. A buyer can agree to cover the tax in the contract, but the statute names the seller, and that’s where every negotiation starts.
Towns that charge more than 0.25%
The municipal portion is 0.25% everywhere, but some towns may add up to another 0.25%. C.G.S. 12-494(c) lets targeted investment communities, and municipalities with designated manufacturing plants, impose the extra tax. The Office of Legislative Research counted 19 eligible municipalities in 2020 and found that most charge the full extra 0.25%, putting the town share at 0.5%.
In one of those towns, an apartment sale pays 1.25% in all: 0.75% to the state and 0.5% to the town. On $2,000,000 that’s $25,000 instead of $20,000. Ask your closing attorney or the town clerk which rate applies, because eligibility and adoption can change and some towns tier the extra tax by price.
Exemptions that matter to investors
C.G.S. 12-498 lists the exempt conveyances, and each one has a code on Form OP-236. The ones apartment owners use, or wrongly assume they can use:
- Code 20: a deed that only changes the identity or form of ownership with no change in beneficial ownership, such as moving a building from you personally into an LLC you wholly own.
- Deeds under certain court decrees, including foreclosure by market sale and loss-mitigation judgments.
- Deeds between spouses, and deeds given to secure a debt.
- Conveyances for less than $2,000 of consideration, which fall below the tax entirely.
- Deeds in lieu of foreclosure, but only for the transferor’s principal residence. A deed in lieu on an investment building is taxable.
- Deed-restricted affordable housing units, with a partial exemption when only some units are restricted.
Selling the LLC: Connecticut’s controlling-interest transfer tax
Connecticut doesn’t let you dodge the conveyance tax by selling the entity. When a controlling interest, meaning more than 50%, in an entity that owns Connecticut real estate worth $2,000 or more is transferred, the controlling-interest transfer tax applies at 1.11% of the property’s present true and actual value, under Chapter 228b of the General Statutes. The state keeps 1% and sends 0.11% to the town.
Compare the numbers. A $5,000,000 apartment building sold by deed pays $50,000 in conveyance tax. Sold as 100% of the LLC, it pays $55,500. The entity route costs more, so in Connecticut it’s chosen for other reasons, such as keeping a favorable loan in place, never to save transfer tax.
A 1031 exchange isn’t on the exemption list in 12-498, so the deed for your relinquished building pays the full conveyance tax even when the gain is deferred.
Worked example: Connecticut transfer tax on a $2M and $5M apartment building
Take a 20-unit building in a town with the standard 0.25% municipal rate, selling for $2,000,000. The state portion is 0.75%, or $15,000. The town portion is 0.25%, or $5,000. The seller pays $20,000 at recording.
In a town that adds the extra 0.25%, the town share doubles to $10,000 and the total becomes $25,000.
At $5,000,000, the state portion is $37,500, the town portion is $12,500 and the total is $50,000, or $62,500 in a town charging 0.5%. A transfer of a controlling interest in the LLC instead would cost $55,500 at 1.11%, assuming the present true and actual value equals the price.
| Scenario | State tax | Town tax | Total |
|---|---|---|---|
| $2,000,000 apartment building, standard town | $15,000 | $5,000 | $20,000 |
| $2,000,000, town charging 0.5% | $15,000 | $10,000 | $25,000 |
| $5,000,000 apartment building, standard town | $37,500 | $12,500 | $50,000 |
| $5,000,000, town charging 0.5% | $37,500 | $25,000 | $62,500 |
| $5,000,000 sold as 100% of the LLC (1.11%) | $50,000 | $5,500 | $55,500 |
| For contrast: $5,000,000 single-family house | $83,500 | $12,500 | $96,000 |
Connecticut transfer tax compared with neighboring states
Connecticut’s 1% on an apartment building is more than double New York State’s 0.4% and a bit above Rhode Island’s 0.75% base rate, before Rhode Island’s residential surcharge. New York State charges $2 per $500 and adds an extra $1.25 per $500 on New York City commercial conveyances of $2 million or more. New York City’s own transfer tax comes on top of that and isn’t shown here.
Rhode Island raised its realty conveyance tax to $3.75 per $500 effective October 1, 2025, with a second $3.75 per $500 on the part of a residential sale above $800,000.
| State | State-level rate | On a $2,000,000 sale |
|---|---|---|
| Connecticut (apartment building) | 0.75% state + 0.25% town | $20,000 |
| New York State (outside NYC) | $2 per $500 (0.4%) | $8,000 |
| New York State, NYC commercial $2M+ | $3.25 per $500 (0.65%) | $13,000 |
| Rhode Island | $3.75 per $500 (0.75%) base | $15,000 before any residential surcharge |
How the conveyance tax fits into your Connecticut selling costs
At 1%, the conveyance tax is a real line on a Connecticut closing statement, but it’s usually smaller than the income tax on a long-held building. Federal capital gains tax, depreciation recapture at up to 25%, the 3.8% net investment income tax for higher earners and Connecticut income tax on the gain all come off the same sale.
A 1031 exchange can defer the income taxes. It can’t defer the conveyance tax, which is due when your deed records, so budget the 1% in cash even on an exchange. Ask your attorney early whether your building is classed as residential or nonresidential and whether your town charges 0.25% or 0.5%. Those two answers set the number, and they’re cheap to confirm before you sign a contract.
Selling your Connecticut apartment building to Skyline
Skyline Capital Investments buys apartment buildings with five or more units throughout Connecticut. We buy directly, can offer seller-carry terms, and work within 1031 exchange deadlines when you’re trading up.
Send the property address and unit count through the form on this page or call (469) 660-2977. We typically respond within 48 hours, and our offer will show the conveyance tax and your other closing costs line by line so you know your net.
