Connecticut Sale

[Snaggletooth]

Yet another Yankee moves to the Sunny South. This one is from CT, and sold a house for $375,000. (I'm not making this up -- there is a steady of stream of rust belt refugees moving to the rural south)

Taxpayer's income (with the residence sale being exempt) is low enough that he would not otherwise have to file Federal tax, as his income is now Social Security and some interest.

Does CT withhold on sales of real estate? If so, is the withholding substantial enough that he may expect a refund if he files a CT return? (Also, the sale was made while he was a CT resident, if that makes any difference)

Lion (and other CT preparers) can you throw me a lifeline here? Thanks, Snag

[Burke]

Wouldn't that information be on the settlement statement? Or an accompanying document? Funds would either have to have been dispersed from the net proceeds at sale, or he would have had to write a check to CT.

[Lion]

Moving South

Well, when my clients sell their houses, they retire to FL and use a preparer down there! And, $1,375,000 is a more usual selling price than $375,000. Even a building lot is at least $400,000 in Fairfield County. CT has jillions of various transfer taxes when real estate changes hands, but I don't think any income tax is withheld. Definitely read the closing statement. CT is in the red and has been known to chase a resident that they suspect might still be a resident. If your software flows the federal information to CT well, you could always file a CT return for their final year. Let CT write to them to say they may not have to file. You go on record listing the date they moved out of CT on their PY return. CT backs out some SS benefits to tax only a max 50% instead of the max 85% on the federal return. Your software should handle all of that. And, the main credit most people can take is for real estate and personal property tax with a maximum credit of $500, in case they actually owe something.

[Snaggletooth]

Thanks

I'll look the closing statement over very thoroughly to see what has been taken. I'm looking specifically for state income tax, as I am expecting all manner of property taxes, transfer taxes, stamp taxes, etc...

[Snaggletooth]

Closing Statement

Finally looked at the closing statement.

I don't think any state income taxes were withheld by CT. Lots of folks got their hand in the pie but not any SIT, best I can tell.

There is a substantial "Conveyance Tax." $1000 to the town of Goshen, CT and another $1875 to the state of CT as a "conveyance tax."

This appears to be non-recoverable. Am I correct? Lion, you still out there?

[Lion]

Yes, but

Think so, Snag. My clients seem to be holding their houses, adding on (just finished a return with office in home and a recent remodel for $450,000) or moving down south to a new preparer. So, I don't see many sales and closing papers. Feel pretty sure no SIT at closing. Maybe someone from a community with greater turnover can speak to your questions. Do conveyance taxes have basis implications?