Susan is transferring her Greenwich home to her adult son for $1 as part of an estate planning strategy. The property's fair market value is $900,000. Susan's attorney advises her that Connecticut's conveyance tax will still apply. On what amount will the Connecticut conveyance tax most likely be assessed for this transfer?
Correct Answer
B) $900,000, because Connecticut assesses conveyance tax on fair market value when consideration is nominal
Under CGS § 12-494, when a deed recites nominal or no consideration (such as $1), Connecticut assessors and the Department of Revenue Services look to the fair market value of the property to determine the conveyance tax base. The state prevents tax avoidance through artificially low stated consideration by using fair market value as the taxable amount. Since the property is worth $900,000, the conveyance tax is assessed on that amount, not the $1 stated in the deed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
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