By Mark Pruner
If there’s anything certain in Greenwich, it’s death, taxes, and that our Greenwich folks will be talking about real estates issues. This week there are a lot more of these issues to talk about at both the state and federal levels. These bills could reshape Greenwich and how we live, invest, and get to the rails here in lower Fairfield County. From zoning rules to estate taxes to federal housing incentives, it’s all on the table right now.
I. Winds of Change: What Might Be Coming
On the state level, affordable housing remains a hot-button issue. Hartford lawmakers want more of it and they’re increasingly willing to step on local toes to get it. Meanwhile, in D.C., the fate of the Big, Beautiful Trump-era tax law—particularly the cap on state and local tax (SALT) deductions—is a very contentious issue, which could scuttle the bill and either way will have a big impact on Greenwich. Toss in proposed tweaks to capital gains, estate taxes, and transit-oriented development incentives, and it’s clear: the coming days may force some significant changes to our bucolic hometown.
Let’s take a look at what might be enacted and what it means for the people who call Greenwich home, from Belle Haven to Byram.
II. What’s Happening in Hartford
A. Affordable Housing: Shifting the Landscape
Hartford has its eyes on Greenwich, and not just for the state taxes that we pay. Connecticut’s affordable housing mandates have been a perennial source of tension with CGS Sec. 8-30g being the law with the biggest impact. However, several proposed changes in H.B. 5002 could bring big changes to Greenwich and how towns like ours manage development.
1. No Parking, No Problem?
One of the more controversial proposals in recent years: eliminating minimum parking requirements for housing near train stations. Supporters argue that forcing developers to build one or two parking spaces per unit raises costs and reduces housing supply.
Opponents, many of whom live in towns like Greenwich, say it’s unrealistic. “We’re not Manhattan,” said one Cos Cob resident. “People here still own cars.”
But Hartford sees things differently. H.B. 5002, which has been passed by both houses of the Connecticut legislatures and is awaiting the governor’s signature would limit or outright ban local parking mandates for new developments within a half-mile of transit hubs. That includes the four Metro-North stations right here in Greenwich. If passed, developers might be allowed to build more units on smaller footprints, particularly in places like downtown Greenwich, Riverside and Old Greenwich and even Mead Point and Belle Haven.
2. Meeting the Affordable Mandate
Under the old state law 8-30g, towns must have at least 10% of their housing stock classified as affordable. Greenwich currently sits well below that threshold, which opens the door to developers who can bypass local zoning laws if they include a small portion of affordable units in their projects.
H.B. 5002 New legislation could expand the definition of “affordable” and reduce the local oversight process even more. For example, any commercial property could be transformed into residential developments as a matter of right. Commercial properties in Byram, Pemberwick, Glenville, Chickahominy and all of the Post Road could be made into large residential apartments buildings.
The governor has until June 24th to sign bill but has major reservations and is getting major objections from all the towns.
3. Transit-Oriented Development (TOD)
The state’s push for denser housing near train stations isn’t just about parking. Transit-oriented development (TOD) is the buzzword in Hartford, with lawmakers promoting higher-density projects around public transportation.
The idea: create more walkable neighborhoods, reduce car dependency, and address the housing crisis—all at once. It’s a one-size-fits-all solution, and some developers are already sniffing around Greenwich for TOD opportunities, encouraged by what they see as a coming wave of incentives, but this doesn’t fit well with the reality around the Cos Cob and Old Greenwich, and particularly not with the Riverside train station.
4. Fair Share, Costs and Trust Funds
A prior 2023 bill required OPM to come up with each town’s “fair share” of affordable house. OPM said Greenwich needed 3,261 affordable housing units, the highest in CT. H.B. 5002 says that Greenwich has to rezone the town so that “only” a quarter of the Fair Share number or 874 more units need to built in Greenwich. The penalty in H.B. 5002 is that if we don’t provide for that number we don’t get “incentive funds”. This may not be that big a penalty as the rule of thumb is that for every dollar in taxes, we send Hartford, we get 1 cent back. It’s very likely that future bills will make this “need” a more and more restrictive requirement.
One of the big issues is who is going to pay for all this affordable housing. The state is looking for local towns to fund it. And, there is a ready source of funds that comes from the towns with the most need for affordable housing. Five years ago, the Connecticut Legislature raised the Seller’s conveyance for sales over $2.5 million from 1.25% to 2.25%. Not surprisingly, 6 towns made up the largest majority of the payments. They are Greenwich 323 sales, Westport 135, New Canaan 87, Darien 75, Fairfield 35, Norwalk 26. No other town had even 20 sales over $2.5 million. If the state simply mandated that the extra 1% tax on conveyances go to affordable housing trust funds, each of these towns with the most need could make a substantial dent in their “fair share” of affordable housing.
III. From Washington with Complications: Federal Tax Shifts
A. SALT Cap: A Trickle That Could Become a Flood
The 2017 federal tax overhaul capped state and local tax deductions (SALT) at $10,000, hitting high-tax states like Connecticut, New York, and New Jersey hard. Ever since, there’s been an ongoing battle to reverse that cap—and 2025 might finally bring change. The house passed a bill raising the SALT cap to $40,000.
If the SALT cap is lifted or increased, expect some real movement in the housing market. Here’s how:
1. From Westchester to Greenwich
If SALT deductions return, Greenwich might lose some of its tax advantage over Westchester. For years, New Yorkers (particularly those just north of the city) have eyed Connecticut as a lower-tax haven. Undoing the SALT cap could mean that less Westchesterites move to Greenwich.
2. From Greenwich to Florida
On the flip side, if Congress doesn’t lift the SALT cap, expect the migration from southward to continue. Palm Beach and Miami have already seen an influx of Greenwich’s financial elite, and that trend won’t slow if the federal government keeps punishing taxpayers in blue states. A highnet-worth retiree doing the math may think twice about staying put—especially when Florida’s no-income-tax pitch gets paired with better weather and zero estate tax.
B. Estate Tax: Changes on the Horizon
The current federal estate tax exemption sits at a historically high $13.61 million per person (double for couples), but unless Congress acts, it’s set to drop by about half in 2026. The Trump bill proposes raising the estate tax exemption to $15 million. Some lawmakers are pushing to extend or even expand the exemption, while others want to bring it back down. It’s become a very contentious issue.
C. The $250K / $500K Capital Gains Exemption
Under current rules, homeowners can exclude up to $250,000 (or $500,000 for married couples) in capital gains on the sale of a primary residence. That’s fine if your house appreciated modestly. But in Greenwich, where even modest homes often sell for $2 million or more, those numbers barely scratch the surface.
Because of these high taxes, long term homeowners are not selling their home and staying in houses that are often inappropriate for them. This also means that younger buyers have fewer houses to buy.
1. Example: 150% gain on home sale becomes a 50% gain after tax and inflation
These are not fancy houses of the rich and famous. A small house in Greenwich just sold for $1.529M that was bought in 1998 for $325,000.
For a more general example, If you use Greenwich average sale prices numbers, if a couple bought a modest 2,000 s.f. house in 2000 and paid $636,000 (using the 2000 average price/sf). In 2025 that house would be worth $1,590,000 for a gain of $954,000 which sounds pretty good, but the IRS will take almost $200,000 of the widow’s retirement nest egg, because her one-time sale kicks her into the highest tax bracket at 23.8%. Also, 57% of the “gain” comes from inflation and it is simply a return of what they originally invested. The widow only has an additional $324,000 to live on for the rest of her life over what they originally invested.
2. Exemptions haven’t changed since 1997
The $250,000/$500,000 exemptions haven’t changed since May 1997, when the law was enacted. In 1997 the average house sold for $172,000. Nothing addresses this in the big, beautiful bill even though lots of long term homeowners all over the U.S. are subject to this tax. I did find a pending bill, H.R.1340 – More Homes on the Market Act, which proposes to increase the capital gain deduction when a homeowner sells. In this highly partisan environment, it has bipartisan support with 61 co-sponsors, 22 Republicans and 39 Democrats including 2 each from NY state, but none yet from our home state CT.
D. Opportunity Zones & 1031 Exchanges
Greenwich may not have official Opportunity Zones, but Stamford does. This federal tax policy around investment is still worth watching. It is a better version of the 1031 like-kind exchange, a favorite among real estate investors, both allow deferral of capital gains taxes if profits are reinvested into similar properties. Trump’s bill carries forward the 1031 exchange provision.
On the flip side, there’s house’s bill moves most Opportunity Zones to rural areas and its not clear if Stamford and Norwalk would be included.
E. Carried Interest: Still Hanging On
For hedge fund managers and private equity managers, it looks like the carried interest will continue to be carried forward. For now, Greenwich’s financial elite can exhale—at least until the next budget cycle.
So where does all this leave us?
In short: change is coming, whether we like it or not. Some of it may lower tax bills, some might raise them. Some could bring new development and much higher density to Greenwich. Other changes may make retirement planning more urgent.
The coming days in Hartford and Washington will be crucial. Whether you’re a longtime homeowner, a young family planting roots, or a financial wizard pondering Florida, it’s worth paying attention—and maybe calling your accountant while you’re at it.
The Sentinel
Next Thursday the Greenwich Sentinel will award their “Sentinel” award to Joe Kelly, a man whose given thousands of hours of his time to students, athletes and our citizens. You should definitely sign up to attend, it’s a who’s who of Greenwich people.
Mark Pruner is a founder of the Greenwich Streets Team at Compass. He can be reached at 203-817-2871 or mark.pruner@compass.com.
