Patricia transfers her Connecticut investment property to her wholly owned LLC for $1. Her attorney tells her that because no money changed hands, there is no Connecticut conveyance tax due. Which of the following best describes the accuracy of this advice?
Correct Answer
B) The advice is incorrect because Connecticut law may assess conveyance tax based on the property's fair market value when the stated consideration is nominal.
Under CGS § 12-494, Connecticut's conveyance tax is based on the consideration for the transfer. When the stated consideration is nominal (such as $1), Connecticut law looks to the fair market value of the property to determine the tax base, preventing tax avoidance through artificially low stated prices. The attorney's advice that no tax is due simply because $1 was stated is not accurate.
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Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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