Connecticut taxes capital gains at 6.99%. Combined with federal taxes, your effective rate on a home sale could reach 25.8%.
CT State Rate
6.99%
Top marginal rate
Federal Rate
15%
Most common long-term bracket
Combined Effective
25.8%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Connecticut is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Connecticut don't qualify for the exclusion. You'll owe 6.99% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Connecticut, homes sold in March sell for 23% more than those sold in October (-15%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Connecticut and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 5.99% | $8,985 | Top marginal rate | |
ConnecticutYou | 6.99% | $10,485 | Top marginal rate |
| 9% | $13,500 | 5% + 4% surtax on income > $1M | |
| 10.9% | $16,350 | Top marginal rate; NYC adds up to 3.876% |
Selling in Rhode Island instead of Connecticut would save $1,500 in state tax on a $150K gain.
Connecticut imposes a progressive income tax with a top rate of 6.99% on capital gains. The state treats capital gains as ordinary income, so your rate depends on your total taxable income. For most sellers with significant home gains, the top bracket applies.
Connecticut also has a 2% conveyance tax on real estate sales (1.25% for the first $800K, 2.25% above), which is paid by the seller at closing. This is separate from the capital gains tax and applies to the entire sale price, not just the gain. On a $400,000 home, the conveyance tax alone is $5,000-$8,000.
The Fairfield County market (Greenwich, Stamford, Westport) often involves high-value properties where gains significantly exceed the federal exclusion. Combined with federal taxes, sellers in Connecticut's Gold Coast can face combined rates exceeding 35% on their taxable gain.
Connecticut also imposes a pass-through entity tax that can affect real estate held in LLCs or partnerships. Sellers who hold investment property through business entities should consult a Connecticut tax professional to understand the layered tax implications.
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