The beginning of the new fiscal year brought along with an increase in the cost to homeowners looking to sell their properties. As of July 1, the city doubled its conveyance tax levy from .25 percent per thousand dollars of sale price, to .50 percent.
The increase was implemented due to the state approving the Enterprise Zone along the West River corridor. That zone will allow the city to give tax breaks to potential developers. The city is one of 17 communities in the state that have the .50 percent levy.
The City Council passed the increase last spring with a unanimous vote. Officials expect the new revenue, expected to be around $500,000 will be used to finance long overdue projects.
Mayor Nancy Rossi was among those hailing the new levy, saying the city can use the extra revenue.
“With the State designating a section of the city an enterprise zone, the (city) was eligible to increase its real estate conveyance tax from .25% to .50% per thousand dollars of real estate transaction value. The State of Connecticut charges a much higher conveyance tax on local real estate transactions, which the city must process and collect money and then forward monthly to the state,” she said. “The city’s new .50% per thousand dollars will generate about $500,000 additional non property tax revenue for the city, and a portion will be used to reimburse the city for the cost of processing real estate transactions. Some of this additional funding will also be invested in the city clerk’s office to facilitate the long overdue digitization of our land records.”
Finance Chairman Bridgette Hoskie was also in favor of the move, which she says supports the mayor’s fiscal vision.
“I’m happy that it passed unanimously, which is extremely important. This was a bipartisan show of support of the mayor’s initiative. The increase brought our rate in line with the region and county. The tax is levied at the time of sale and it’s a one-time fee. The state as well as the city receive percentage,” she said.
Asked whether this was an attempt to “nickel and dime” taxpayers, Republican Councilwoman-at-large Collen O’Connor defended the levy.
“A Conveyance Tax is a tax imposed on the transfer of real property at the state, county, or municipal level. This tax is generally calculated as a percentage of the sale price. The conveyance tax is also called a real estate transfer tax. It is my opinion that we are not nickel-and-diming people. This tax will only be imposed when the business or property is sold. It is a one-time tax, going up .25 percent will not affect the average taxpayer who plans to stay in West Haven,” she said.
GOP Councilman Barry Lee Cohen (R-10), who is the front-runner for his party’s nomination in the November mayoral election said this was the first increase he has supported.
“As evidenced by my council record, I never voted for fee increases of any kind prior to this .25 percent increase in the conveyance fee. I have stated numerous times, a fee is just another tax. It comes out of the same wallet that we pay our high personal property taxes,” he said. “However, it is extremely important to note that the conveyance fee is paid by the seller. It is not being borne by the buyer or existing property owners. Most importantly, we are not deterring buyers from coming to West Haven.”
The convenance tax was enacted by the state in 1967 is was added onto the sale costs of property as a way of paying for the transactional fees associated.
Since the tax was enacted, the state as added other conveyance to raise revenue.
The state allows municipalities with Enterprise Zones to raise the levy as a means of offsetting lost revenue in tax arrangements with new developers.