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Connecticut

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Connecticut 1031 Exchanges

In general, the rules and processes for conducting a 1031 exchange in Connecticut are similar to those in other states across the United States, as these are governed by federal tax law under Section 1031 of the Internal Revenue Code. However, there are a few nuances and local considerations that might make a 1031 exchange in Connecticut unique:

  1. State Conveyance Tax: Connecticut imposes a state conveyance tax on the sale of real estate, which must be paid when the relinquished property is transferred. The rate can vary based on the type of property and its location, and there are additional local conveyance taxes in some municipalities. This tax must be considered in the financial calculations of the exchange, as it affects the net proceeds from the sale of the relinquished property.
  2. Environmental Regulations: Connecticut has stringent environmental laws and regulations, which can impact real estate transactions, including those involving a 1031 exchange. For example, if a property has environmental issues, it could affect the marketability and value of the property, potentially complicating the exchange process. It's important to conduct thorough due diligence to identify any such issues early in the process.
  3. Property Market Characteristics: The real estate market in Connecticut can vary significantly from one region to another. For instance, property values and rental market conditions in urban areas like Hartford or Stamford can be quite different from those in rural areas. Understanding these local market conditions is crucial for identifying suitable replacement properties that meet your investment goals and comply with the "like-kind" requirement of a 1031 exchange.
  4. Legal and Professional Expertise: It's beneficial to work with professionals who have specific experience with Connecticut real estate transactions, including attorneys, accountants, and qualified intermediaries who understand the local market and legal nuances. This local expertise can be invaluable in navigating the complexities of a 1031 exchange in the state.

In Connecticut, the fundamental principles of a 1031 exchange, such as the requirement to reinvest the proceeds into a like-kind property and the timelines for identification and acquisition of the replacement property, remain consistent with federal law. Always ensure you have the right team and resources to guide you through the process effectively.

Connecticut State Tax Information

The Combined Rate accounts for Federal, State, and Local tax rate on capital gains income, the 3.8 percent Surtax on capital gains and the marginal effect of Pease Limitations (which results in a tax rate increase of 1.18 percent).

Connecticut has a complex set of phase-out provisions. For each single taxpayer whose Connecticut AGI exceeds $56,500, the amount of the taxpayer's Connecticut taxable income to which the 3% tax rate applies shall be reduced by $1,000 for each $5,000, or fraction thereof, by which the taxpayer's Connecticut AGI exceeds said amount. Any such amount will have a tax rate of 5% instead of 3%. Additionally, each single taxpayer whose Connecticut AGI exceeds $200,000 shall pay an amount equal to $90 for each $5,000, or fraction thereof, by which the taxpayer's Connecticut AGI exceeds $200,000 but is less than $500,000, and by an additional $50 for each $5,000, or fraction thereof, by which the taxpayer’s AGI exceeds $500,000, up to a maximum payment of $3,150. For each MFJ taxpayer whose Connecticut AGI exceeds $100,500, the amount of the taxpayer's Connecticut taxable income to which the 3% tax rate applies shall be reduced by $2,000 for each $5,000, or fraction thereof, by which the taxpayer's Connecticut AGI exceeds said amount. Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the 3% tax rate does not apply shall be an amount to which the 5% tax rate shall apply. Each MFJ taxpayer whose Connecticut AGI exceeds $400,000 dollars shall pay, in addition to the amount above, an amount equal to $180 for each $10,000, or fraction thereof, by which the taxpayer's Connecticut AGI exceeds $400,000, up to a maximum of $5,400, and a further $100 for each $10,000, or fraction thereof, by which Connecticut AGI exceeds $1 million, up to a combined maximum payment of $6,300. Connecticut taxpayers are also given personal tax credits (1-75%) based upon adjusted gross income. Connecticut has a "tax benefit recapture," by which many high-income taxpayers pay their top tax rate on all income, not just on amounts above the benefit threshold.

State Rate

6.99%

Local Rate

0.00%

Combined Rate

31.99%

Deductions

None

1031 Exchange Providers in Connecticut

CDEC 1031 Exchange
deferred.com
Verified

New York, NY

Founded in 1989, Chicago Deferred Exchange Company ("CDEC") is one of the oldest and most experienced Qualified Intermediaries in the country and is part of Wintrust Financial. CDEC has commented before the IRS National Office on important industry issues and is a nationally recognized authority on Section 1031 Like-Kind Exchanges. CDEC applied for, and received, several Private Letter Rulings from the Internal Revenue Service, as well as rulings from the City of New York Department of Finance, the State of New Jersey and the District of Columbia. A separate Qualified Trust Account is created for every client on every transaction. Funds held in trust, for the benefit of our clients, are segregated from creditors' claims by operation of law.
Plenti 1031 Exchange
deferred.com
Verified

Carlsbad, CA

Just a few clicks away from easy, simple, answers and tax savings...the only investor friendly 1031 firm with technology to safeguard and streamline your exchange.
CATIC Exchange, LLC
deferred.com
Verified

Hartford, CT

CATIC Exchange, LLC, headquartered in Connecticut, has been in business for over 50 years. The company is primarily focused on providing professional services to policy-issuing attorneys, insured lenders, home-buyers, and other members of the real estate community. CATIC is an underwriting member of both the American Land Title Association (ALTA) and the New England Land Title Association (NELTA). They offer standard ALTA policies and expanded protection policies for residential and commercial properties. CATIC annually insures mortgages issued by more than 1,300 lending institutions and has received a B++ rating from A.M. Best, an A' rating from Demotech, and an A- rating from Kroll Bond Ratings. However, they are not a member of the Federation of Exchange Accommodators.
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