Connecticut... The New Endangered Species

As stated by the Connecticut Real Estate Market Report, in the first quarter of 2011 home sales across all eight Connecticut counties experienced a decline. New London and Windham Counties suffered the smallest amount declines, while New Haven and Middlesex Counties had the biggest declines, losing 20% and 14.8% respectively.  Cleary the housing market in Connecticut is still struggling.

However, neither the vast fall in home values nor the sluggish real estate market prevented Governor Malloy and the General Assembly from imposing a 50% increase in the real estate conveyance tax effective July 1. The new tax hike raises the nonresidential rate from 1 percent to 1.25 percent. The residential rate for the portion of value up to $800,000 goes from 0.5 percent to 0.75 percent. Any portion more than $800, 00 goes from 1.0 percent to 1.25 percent. As a result, a single-family dwelling that sells for $300,000.00 carries a conveyance tax of $2,250.00 that is $750.00 more than before the tax hike.

However, raising the conveyance tax on sellers is not enough for the administration and the majority party in Hartford. Now they are calling for yet another tax, this time targeting home buyers. The new 1% tax on the purchase price of homes in excess of $150,000.00 will have a direct impact on young couples and working families trying to buy a starter house. For example, the same $300,000.00 house will cost $301,500.00. However, the, purchaser’s conveyance tax would be due at the closing; it cannot be paid over time in small monthly payment. Having to accrue the conveyance tax money together with accumulating a down payment could make the difference between buying a house and not buying a house. It seems that if the administration’s goal were really to grow the economy and attract people to Connecticut they would try to make home ownership more affordable not more difficult.