By Carline Martin
DID YOU KNOW that by simply crossing the border from New York to Connecticut to purchase your home, you will not only gain a tremendous savings on your property taxes but you will also save big on your closing costs? Many buyers have already discovered, not only is there great value in the quality of life they gain when moving to Greenwich but they are saving money, as well.
By now, it’s common knowledge that Connecticut, especially Greenwich, offers property tax rates that are significantly lower than in nearby Westchester. Many have discovered that, although they may pay a bit more for their home initially, the long-term savings far outweighs the cost. However, what many have failed to consider is that purchasing a home in Connecticut will save quite a bit in closing costs for buyers, as well. This is largely because New York assesses many fees and taxes that Connecticut does not. While Connecticut does impose a conveyance tax, this tax is only applicable to sellers. For more information on Connecticut conveyance tax, please refer to the following link https://www.cga.ct.gov/2020/rpt/pdf/2020-R-0020.pdf
For example, New York state will charge a tax on the privilege of recording a mortgage on real property located within the state. The mortgage tax rate in Westchester County is 1.05% of the loan amount – $30. In addition, New York City and some counties will impose additional, local taxes on mortgages recorded in their jurisdiction. Connecticut imposes no such mortgage recording tax.
New York state also charges a mansion tax to buyers of 1% – 3.9% on any residential real estate purchase that is over $1M, a tax that Connecticut does not impose. See the breakdown below:
Purchase Price Range Tax Rate
$1-$1.999 Million 1%
$2-$2.999 Million 1.25%
$3-$4.999 Million 1.50%
$5-$9.999 Million 2.25%
$10-$14.999 Million 3.25%
$15-$19.999 Million 3.50%
$20-$24.999 Million 3.75%
$25 Million and Up 3.90%
I recently spoke with Bill Krasnor, President of Strategy Mortgage, and he provided the following rough comparison of closing costs for a $1M home in New York vs Connecticut (with a loan of $800,000).
New York Connecticut
Appraisal Fee – $750 $750
Origination Fee – $1338 $1338
Tax Service & Flood Cert. – $100 $100
Title Insurance – $6000 $4200
Mansion Tax – $10,000 N/A
Mortgage Tax – $8,370 N/A
Personal Attorney fee – $3000 $1500
Credit Report – $113 $113
Bank Attorney fee – $1500 N/A
Recording Fee – $450 $350
Total ________________ ________________
$31,621 $8,351
As you can see from the calculation above, buyers save approximately $23,270 in closing costs vs a similarly priced home in Westchester County. Additionally, when you factor in the favorable quality of life offered to Fairfield County residents, one can clearly see that this savings comes without sacrifice.
Greenwich, in particular, offers a convenient commute to Grand Central Terminal in under an hour. A safe, clean and welcoming community, with attractive property taxes, excellent schools, parks, beaches, shopping and dining, makes Greenwich a perfect choice for those who value quality of life with close proximity to NYC. To further explore the many advantages of relocating to Greenwich and greater Fairfield County, please contact me any time.
SEND ME YOUR QUESTIONS – If you have a real estate or home related question for which you would like a professional opinion, please email me at carlinemartin@bhhsne.com with “Sentinel” in the subject line. Each month, I will provide answers to one or two selected questions. Email me your Real questions. I look forward to hearing from you!
Carline Martin is a Greenwich native and Realtor with Berkshire Hathaway/New England Properties in Greenwich.
She may be reached at carlinemartin@bhhsne.com or at 203-249-9975.
