What the mansion tax could mean for you

On Behalf of | Jun 28, 2019 | Income Tax

Connecticut lawmakers just recently agreed on a two-year budget plan. To combat the significant budget deficit, a mansion tax is set to be implemented in the year 2023. It is expected to bring in over $6 million a year for the state. How exactly will the mansion tax work?

According to a recently released article, the mansion tax will apply to those individuals who sell their homes for $2.5 million or more. The state will collect a 2.25% conveyance fee on these sales. If the seller moves out of state, that is money he or she will not see come back to them in any way. If, however, the seller remains in state, he or she will be able to claim an income tax credit within a few years following the real estate transaction.

As the state is looking at a $3.7 billion deficit, this mansion tax is just a small drop in the bucket when it comes to getting the state’s finances back on track. Not all lawmakers agreed to this plan. Some still believe it will cause the wealthier individuals to leave the state or refuse to purchase property here. According to reports, 62% of individuals who left the state in the past year had incomes of over $100,000. The bulk of those choosing to stay are the ones who are not likely to be affected by this mansion tax.

When the mansion tax does take effect, there are likely to be a lot of questions about how it works and what one has to do to pay it or claim a credit when it comes time to file their taxes. Legal counsel will be prepared to assist those who need help understanding this tax law change. Further assistance can be provided to those Connecticut residents who may fail to pay the tax as outlined and end up facing penalties for doing so.