Connecticut Real Estate Conveyance Tax After a Death: What Executors Need to Know

When an executor sells or transfers the decedent's Connecticut real estate, the state's real estate conveyance tax enters the picture. But unlike most state taxes executors deal with, the conveyance tax is not always triggered — and when it isn't, you still have to file the paperwork to prove it. Here's how it works, what exemptions apply to estate transfers, and where executors commonly make mistakes.

What Is the Connecticut Real Estate Conveyance Tax?

Connecticut imposes a conveyance tax on the transfer of real property. The tax is split into two components:

1. Municipal conveyance tax: Rates vary by municipality, generally 0.11% of the consideration (sale price), with higher rates in certain municipalities. Some cities — particularly those with targeted investment programs — charge up to 0.5%.
2. State conveyance tax: Currently 0.75% on the first $800,000 of consideration, 1.25% on amounts above $800,000. A surcharge applies to certain non-owner-occupied residential sales.

The combined rate means a $600,000 home sale can carry around $4,500 to $7,500 in conveyance taxes — a meaningful cost when you're trying to maximize estate distributions to heirs.

What Triggers the Tax for Estates

The conveyance tax is generally triggered by any transfer of Connecticut real estate for consideration — meaning any sale or exchange for money or something of value. This is straightforward when an executor sells the estate property to a third-party buyer at market value.

The more nuanced question is what happens when the executor distributes the real estate directly to a beneficiary as part of the estate distribution — no money changes hands; the heir just receives the property through the probate decree.

Distributions Under a Will or Intestacy: The Exemption

Here is the critical distinction most executors need to understand: distributions of real property from an estate to a beneficiary under a will or intestacy are generally exempt from Connecticut's conveyance tax — both the state portion and the municipal portion.

However, the exemption is not self-executing. Even when no tax is owed, the executor must file Form OP-236 (Connecticut Real Estate Conveyance Tax Return) with the Town Clerk at the time the deed is recorded. The OP-236 must specifically indicate the applicable exemption. Failing to file the form, or filing it without the proper exemption code, can delay or block the recording of the deed.

This is a paperwork trap that catches many pro se executors who assume that "exempt" means they don't have to do anything. You still file — you just don't pay.

When the Conveyance Tax Does Apply to Estate Transactions

Several common estate scenarios do trigger the conveyance tax:

Selling the property to a third party. When the executor sells the decedent's home on the open market to a buyer unrelated to the estate, this is a standard conveyance subject to tax. The tax is typically paid at the closing table through the title company or closing attorney.

A beneficiary buyout. If one heir wants to purchase another heir's share of the inherited property — effectively buying out the other beneficiaries' interests — a conveyance tax can apply to that transaction.

Sale of business real estate. Non-residential property sales carry the same rates and are generally not exempt regardless of the estate context.

Transferring property to a corporation or trust after inheritance. If a beneficiary receives property tax-free through a probate decree and then immediately transfers it to a business entity, that second transfer can trigger the tax.

Filing Form OP-236: The Mechanics

The Form OP-236 must be filed with the Town Clerk in the municipality where the property is located at the time the deed is presented for recording. Key points:

• Timing: The form is filed simultaneously with the deed. You can't record a deed on Connecticut real property without the accompanying OP-236.
• Who files: The grantor (the estate, through the executor) is responsible for filing and, where applicable, paying the tax.
• Payment: If conveyance tax is due, it is paid to the Town Clerk at the time of recording.
• Recording fees: Separate from the conveyance tax, the Town Clerk charges recording fees: $70 for the first page of any document, $5 for each additional page.

The Connection to the Estate Tax Lien Release

Form OP-236 does not release Connecticut's inchoate estate tax lien on the property. Those are two separate processes.

The lien release comes through the Probate Court — specifically through the filing of Form CT-706 NT (or CT-706/709 for taxable estates), payment of the probate fee, and the court's issuance of a Certificate Releasing Connecticut Estate Tax Lien. That certificate must also be recorded with the Town Clerk before the OP-236 is even relevant.

The practical sequence for a real estate sale out of an estate is:

1. File CT-706 NT with the Probate Court within six months of death.
2. Pay the probate fee assessed by the court.
3. Receive the Certificate Releasing Connecticut Estate Tax Lien from the court.
4. Record the lien release certificate with the Town Clerk in each municipality where the property is located.
5. Proceed with the sale or distribution.
6. At closing or at the time of deed recording, file Form OP-236 with the Town Clerk.

Attempting to sell before step 4 is complete will result in a title defect that blocks the closing. The buyer's attorney will flag the unrecorded lien release, and the sale will not proceed.

Real-World Scenario: Selling the Family Home

Say the decedent's estate consists primarily of a $650,000 home in Fairfield County. The executor files the CT-706 NT, pays the probate fee (approximately $2,240 based on the gross estate value), obtains the lien release certificate, and records it with the town. The home is then listed and sold to a third-party buyer for $650,000.

At closing:

• State conveyance tax: 0.75% × $650,000 = $4,875
• Municipal conveyance tax: varies by town, but typically around 0.11% × $650,000 = $715
• Total conveyance taxes: approximately $5,590, deducted from proceeds at closing
• Form OP-236: filed with Town Clerk at time of deed recording

The net proceeds flow into the estate account and, after satisfying any remaining creditor claims and the final accounting, are distributed to the beneficiaries.

Real-World Scenario: Transferring to a Beneficiary

Same estate. Instead of selling, the executor distributes the home outright to the sole beneficiary named in the will. No sale price. The executor records a fiduciary deed conveying the property from the estate to the beneficiary.

At recording:

• State conveyance tax: exempt (distribution under will)
• Municipal conveyance tax: exempt (distribution under will)
• Form OP-236: must still be filed with the Town Clerk, with the appropriate exemption indicated
• Recording fees: $70 for the first page of the deed and OP-236, $5 per additional page

The beneficiary receives the property with a stepped-up cost basis equal to the date-of-death fair market value — which matters considerably when they later sell. Documenting that appraisal now protects them from unnecessary capital gains tax down the road.

Spousal Transfers: Additional Considerations

When real property passes directly to a surviving spouse — either through joint tenancy with right of survivorship, through the will, or through the intestacy laws — the conveyance may also qualify for a spousal exemption from conveyance tax. The OP-236 still must be filed documenting this.

Additionally, where property passes to a surviving spouse, the probate fee calculation includes a statutory reduction: the value of property passing to the surviving spouse is reduced by 50% for purposes of calculating the probate fee under C.G.S. § 45a-107. This is distinct from the conveyance tax exemption but operates in the executor's favor in the same real estate scenario.

Connecticut real estate transfers out of an estate involve three separate forms, three separate agencies, and a strict sequencing requirement. Getting the lien release, the deed recording, and the OP-236 in the right order is what separates a smooth closing from a collapsed one. The Connecticut Final Tax & Estate Tax Guide covers this entire process — including the CT-706 NT filing, the lien release, the probate fee calculation, and Form OP-236 — with step-by-step instructions for executors handling the estate themselves.

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