ROBERT FIORITO – ‘A regressive tax’

The Connecticut Association of Realtors continues to push for the sunset of a controversial real estate conveyance tax, although a bill extending the tax by two years passed in both the state House and Senate before the end of the Legislature’s regular session earlier this month.

Senate Bill 6841 was still sitting on Gov. M. Jodi Rell’s desk at press time, waiting for her signature. But CAR continued to rail against the bill, which members say unfairly piles on taxes and fees for homebuyers and sellers.

“Obviously, we were extremely disappointed in the actions of both the House and the Senate [when they passed this],” said Robert Fiorito, president of CAR. “It’s a regressive tax.”

The bill has essentially been a source of debate for years. In 2003, the state Legislature passed a bill allowing municipalities to increase their conveyance taxes. The increases were supposed to last 15 months and sunset in June 2004, but last year the Legislature extended it to June 30 of this year.

During debate, Fiorito said, several legislators argued that the tax was regressive and that it hurt elderly and first-time homebuyers.

“It just boggles my mind that they would say something [and still pass it],” he said. “[Anytime you add expense to buying a home] you’re raising that bottom rung a little higher Â… At some point, we’re supposed to be for affordability.”

The Senate voted 24-12 to keep the tax at $2.50 per $1,000 of property sold or transferred, according to the Associated Press. If the Legislature had allowed the tax increase to sunset, it would have decreased to $1.10 per the same amount.

Cities and towns supported the bill because it increased their tax revenue. Some said they were counting on the extra money for their budgets. But Senate Minority Leader Lou DeLuca, R-Woodbury, told the AP that cities and towns knew the tax was set to decrease and should not have relied on it.

“Many people are not even aware of this tax until they sell their home,” DeLuca said.

‘Unrelenting’ Costs

Fiorito emphasized that the bill is not an issue that affects Realtors, but one that affects homebuyers.

Fiorito wrote a letter asking senators to oppose the bill, according to the AP.

“The real estate conveyance tax is regressive, it is not based upon a person’s ability to pay, and it hurts senior citizens and low-middle-income families,” he wrote.

CAR is actively encouraging the governor to not sign the bill, and has asked its members to call or e-mail Rell’s office. Fiorito is not confident that the organization has a good chance, but said it will keep working to make sure the tax sunsets.

“We’re not going to go away on this,” he said.

Another bill that was approved by the Legislature also would increase fees related to the transfer of property. The bill would impose a $30 deed recording surtax on any real estate transfer.

The bill “continues the Legislature’s unrelenting piling-on of fees and levies when people transfer real property,” according to a legislative report from CAR.

CAR opposed the transfer bill, but it is now on the governor’s desk awaiting her signature.

“We felt it was one more instance of piling fees on transactions,” said Lisa Governale, spokeswoman for CAR.

Another bill in the same cluster is House Bill 6393, which would allow any municipality after July 1 to impose a new 1 percent conveyance tax on buyers of real estate on the portion of the sales price in excess of $100,000, according to CAR. The bill, which is called “An Act Concerning Community Preservation and Investment,” would mark the first time that buyers would be subject to any sort of conveyance tax.

That bill has gone nowhere. It was referred to the Committee on Finance, Revenue and Bonding last month and did not move before the end of the general session.

Another bill that would increase the cost of buying or selling a home is House Bill 6442, which would spread a “super” conveyance tax – a clause that allowed municipalities such as Bridgeport to raise their conveyance tax by an extra 0.25 percent – to all the communities in the state. That bill had no action taken on it since February, according to the Legislature’s Web site.

CAR also supported some bills that were passed. The organization supported Senate Bill 1254, which the House and Senate both passed. The bill would “ease restrictions on real estate licensees operating under an ‘entity’ form of ownership, thereby making regulation conform more closely to other professions and to guard against excessive penalties for minor violations of the law,” according to CAR’s legislative report.

The bill would remove language in the license law that says everyone who actively participates in a real estate brokerage must be licensed as a real estate broker. It precludes licensed salespeople from being officers of the firm or having an ownership interest, according to CAR.

The bill has been sent to the secretary of state’s office for review.