TAX NEWS - 2010

Connecticut Tax: Foreclosures are now exempt from conveyance tax

BRISTOL — Changes to the conveyance tax made by state lawmakers this week will have little impact on municipal treasuries.

For Bristol and 17 other targeted communities in Connecticut, the legislature's move to extend the tax imposed on real estate transfers was crucial to keep municipal budgets balanced and stave off a serious revenue reduction.

The tax is expected to bring in $500,000 in Bristol during the next fiscal year, which begins July 1.

Without the money, city Comptroller Glenn Klocko said Friday, officials would have to go back and revise the spending plan adopted a month ago.

Lawmakers did make a small change in the terms of the law when they agreed to exempt foreclosures, short sales and deeds in lieu of foreclosures from payment of the extra tax.

"The impact will be minimal," Klocko said, probably costing the city less than $5,000.

The state Office of Fiscal Analysis figured the changes would cost municipalities $1.2 million statewide, enough perhaps to notice but a number unlikely to have much impact on any particular community.

In Bristol, city councilors voted Thursday to extend the extra tax in Bristol, a formality given the budget's use of the funds. Only one councilor opposed the move, Republican Ken Cockayne.

The state measure, which has been extended annually since 2003, allows "target investment communities" such as Bristol and New Britain to raise the conveyance tax from $2.50 on every $1,000 of the sale price to $5 on every $1,000 – enough to add as much as $1 million to Bristol's coffers in a busy year.

Bristol initially refused to hike the tax, which real estate agents opposed, but it has imposed it since 2004 with few complaints.

Bristol's entire legislative delegation voted in favor of extending the conveyance tax statewide for another year.