Connecticut only stopped taxing the deed between an owner and their own company in 1999

The Connecticut Exemption, and the Conditions That Void It

Connecticut runs three separate levies over this transaction and a landlord needs to clear all three, not one. There is the state conveyance tax under Conn. Gen. Stat. § 12-494, imposed on "the consideration for the interest in real property conveyed" and stepped up through brackets on higher-value residential property. There is a municipal conveyance tax under the same section, imposed on the same consideration, which certain targeted investment communities and municipalities containing designated manufacturing plants are authorised to raise above the base rate. And there is the controlling interest transfer tax under chapter 228b, which reaches "the sale or transfer for consideration of a controlling interest in an entity" holding Connecticut real property, controlling interest meaning "[m]ore than 50% of the total combined voting power of all classes of stock in the corporation, or in the case of a noncorporate entity ... more than 50% of the capital, profits, or beneficial interest."

What gets you past the first two is § 12-498(a)(17). Note what it is conditioned on: not that you own the LLC, but that there is "no change in beneficial ownership" as a result of the conveyance. Two people who own a rental jointly and take matching interests in the LLC are describing the same beneficial ownership in a new wrapper. The same two people who take mismatched interests, or who let a third person into the LLC as part of the same arrangement, are describing something else. DRS's own wording on Form OP-236 is the plainest statement of the test: "The instrument conveys property to effectuate a mere change of identity or form of ownership or organization where there is no change in beneficial ownership."

If the exemption is not claimed or does not hold, the mortgage is what makes the bill real. The OP-236 instructions define the base without leaving room: "Consideration includes money or anything of value paid or transferred directly or indirectly whether or not expressed in the deed, instrument, or other writing. By way of example and not of limitation, consideration includes the amount of any liability assumed and the amount of any liability to which the property is subject." There is a separate backstop at § 12-498(a)(10) for deeds where the consideration is below a small statutory figure, but a loan balance on a rental clears that figure by itself.

Two things about this record we would rather say than let you assume. The General Assembly's own site, cga.ct.gov, failed certificate verification on every attempt we made, so the rate brackets in § 12-494 and the exemption list in § 12-498 came from a permitted mirror rather than from the state's own publication of the statutes; the exemption language itself, the OP-236 implementation, the consideration definition and the whole controlling-interest block were read on portal.ct.gov. And we could not establish which municipalities currently carry the higher municipal rate, the DRS special notice confirms the authorisation exists for targeted investment communities and municipalities with designated manufacturing plants, but publishes no list, and the list circulating elsewhere is two decades old. We are naming no towns. The town clerk where the property sits knows what that town charges.

Whatever the state does, counties and municipalities in Connecticut can levy transfer tax of their own on the same deed. Here the local tax is calculated from the state one, so an exemption that clears the state charge clears the local charge with it. Check with the recorder for the county the property sits in before you assume the total.

Connecticut also taxes transfers of a controlling interest in an entity that owns real property, which is aimed at the obvious workaround, selling the LLC rather than the building. How far it reaches varies: some states apply it to any realty-holding entity, others only above an ownership threshold or only to commercial property, so whether it touches a residential rental is a question for the state’s own rules rather than something to assume in either direction.

Authority: Conn. Gen. Stat. § 12-498(a)(17). portal.ct.gov

Does the Transfer Reset Your Property Tax in Connecticut?

No. Connecticut does not cap a property’s assessed value at what you paid for it, assessments track market value on the assessor’s own cycle regardless of who holds title. A deed from you to an LLC you own does not change the assessment, because there was never an acquisition-date value locked in to lose. This is the part of the California story that gets copied onto pages about states where it simply does not apply.

The mechanism behind that answer is worth knowing, because it explains why the deed is invisible to your assessor. Conn. Gen. Stat. § 12-62a requires that "each municipality, as defined in section 7-381, shall establish a uniform assessment date of October first" and that "each such municipality shall assess all property for purposes of the local property tax at a uniform rate of seventy per cent of present true and actual value."

Revaluation is town-wide and on a clock: § 12-62 requires that "each town shall implement a revaluation not later than the first day of October that follows, by five years, an October first assessment date," and defines revaluation as establishing "the present true and actual value of all real property in a town as of a specific assessment date." Nothing in either section requires or permits a single parcel to be revalued because it changed hands.

Connecticut has no general homestead exemption from property tax, so there is no across-the-board owner-occupier benefit to lose. What it has is age- and income-limited relief for elderly and disabled homeowners under Conn. Gen. Stat. § 12-129b and § 12-170aa, which DRS's own OP-236 instructions describe as attaching to "the principal residence of a grantor." A rental held by an LLC is not that, and neither is a former residence once it stops being occupied by the claimant. We did not read the text of those two sections themselves, so we are not stating their amounts or their income thresholds, the assessor in the town where the property sits administers them.

Both statutory sections behind this section were read on a mirror rather than on cga.ct.gov, for the certificate reason described above. The substance is short and unambiguous, but that is where it came from.

Separately, and this catches people converting a former home into a rental: the benefits that turn on owning and occupying the property as your residence, a homestead exemption, an owner-occupancy credit, a residential assessment rate, are not things an LLC occupies a home to earn. Where the property still carries one, the deed puts it at risk, and the bill goes up whether or not the assessment itself moves. Which benefit is at stake, and on what terms, is a question for the assessor in the county the property sits in.

Authority: Conn. Gen. Stat. § 12-62; § 12-62a, codes.findlaw.com

Moving a Property You Already Own Into the LLC in Connecticut

1. 1

   Write down who beneficially owns the property today

   The § 12-498(a)(17) exemption turns on there being "no change in beneficial ownership," so the starting position has to be documented before the LLC is designed. If two people own the rental in unequal shares, the LLC has to reproduce those shares to stay inside the exemption. Deciding the ownership split for other reasons and then hoping the exemption follows is the wrong order.

2. 2

   Form the LLC with the Secretary of the State and adopt the operating agreement

   The operating agreement is where the members' percentage interests are actually recorded, and it's the document that evidences beneficial ownership matching what existed before the deed. Get it signed before the conveyance rather than after, and get the bank account open so rent stops landing in a personal account.

3. 3

   Ask your servicer for written consent

   The deed is a transfer of title and a due-on-sale clause is written to catch one. Connecticut's conveyance tax exemption has nothing to say about your loan. Ask before recording. A written consent on file is a different position from a phone call after the town clerk has indexed the deed.

4. 4

   Prepare Form OP-236 with the exemption claimed as code 20

   The real estate conveyance tax return goes to the town clerk with the deed, and the exemption is claimed on it. Code 20 is DRS's implementation of the mere-change-of-form provision. The form is also where the consideration gets disclosed, which is why the mortgage balance is relevant even on an exempt transfer.

5. 5

   Record with the town clerk and then update the town

   Recording happens at the town clerk's office in the town where the property sits, not at a county office. Connecticut has no county government doing this. Afterwards, tell the assessor's office who now owns it, update any municipal landlord registry entry to name the agent-in-charge, and re-paper the insurance policy and the leases in the LLC's name.

One LLC Per Property, or One for the Portfolio?

Connecticut has no series LLC statute, so separating properties means a separate LLC for each one.

That negative is solid: we read the whole of chapter 613a, the Connecticut Uniform Limited Liability Company Act at §§ 34-243 through 34-283d, and searched it for "protected series," "registered series," "series of members," "establish a series," "one or more series" and "designated series." Every one of them returns nothing. The word "series" appears three times in the entire chapter and none of those three authorises a domestic series. Two are in the interest-exchange provisions and concern "classes or series of transferable interests," which is a different concept entirely.

The third occurrence is the one people trip over, so it is worth quoting. Conn. Gen. Stat. § 34-275(a) provides that "the law of the governing jurisdiction of a foreign limited liability company governs ... (3) the liability of a series of the company." That sentence tells a Connecticut court which state's law to look to when a series of a company formed elsewhere is in front of it. It is not authority for a Connecticut company to establish one, and it is not a green light for holding Connecticut rentals in a Delaware series and assuming the internal walls travel.

Subsection (c) of the same section adds that registration "does not authorize the foreign company to engage in any activities or affairs or exercise any power in this state that a limited liability company may not engage in or exercise in this state." How those two sentences interact for a series that owns Connecticut real estate is a question for a Connecticut attorney, and we are not going to guess at it.

The practical Connecticut consequence of separate LLCs is at the front of this page rather than the back: every property you move is its own deed, its own OP-236, and its own exemption claim in front of its own town clerk. That is a per-property piece of process, not a one-off.

Practically, that leaves the familiar trade-off. Separate LLCs mean separate filing fees, separate annual reports, separate registered agents and separate bank accounts, every year, for as long as you hold the properties. One LLC holding several properties means one set of costs and one pool of assets exposed to a claim arising at any of them. Which side of that you land on is a function of how much equity is in the portfolio, and it is worth pricing the recurring cost before deciding, our Connecticut LLC cost breakdown has the per-entity figures.

What Creditors Can Reach, What the Connecticut Statute Says

The reason to hold a rental in an LLC is usually to keep a claim arising at the property from reaching everything else you own. The reverse question matters just as much and gets far less attention: if someone wins a judgment against you personally, can they reach the rental inside the LLC? That is what a state’s charging-order provision decides.

Connecticut's LLC act makes the charging order the exclusive remedy, and says so for single-member LLCs specifically.

Connecticut's provision is Conn. Gen. Stat. § 34-259b(e), and it is about as emphatic as these statutes get: "The entry of a charging order is the exclusive remedy by which a person seeking to enforce a judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor's transferable interest. With respect to the judgment debtor's transferable interest, attachment, garnishment, foreclosure or other legal or equitable remedies are not available to the judgment creditor, whether the limited liability company has one member or more than one member." The last clause is doing deliberate work. Many states leave the single-member case unaddressed and the argument then runs on general principles; Connecticut wrote the answer into the subsection.

What the creditor gets instead is narrow. Subsection (a) makes the charging order "a lien on a judgment debtor's transferable interest" and requires the company "to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor," with the creditor having "only the right to receive any distribution or distributions to which the judgment debtor would otherwise have been entitled." Subsection (b) lets the court "appoint a receiver of the distributions subject to the charging order" and "make all other orders necessary to give effect to the charging order."

One detail in that list is worth noticing because it is an omission rather than an inclusion. The uniform act on which chapter 613a is based carries a foreclosure clause in the court's toolkit; Connecticut did not enact it there, and instead named foreclosure among the remedies subsection (e) takes off the table. The section as it stands came in through P.A. 16-97, effective July 1, 2017, which makes it recent legislation rather than inherited text.

We are reporting what the section says, not what a court would do with your facts. Outcomes turn on how the LLC was capitalised, how it has been operated and what the creditor is owed, and none of that is something a page can assess. If the answer above is load-bearing for you, it is a question for a Connecticut attorney.

Authority: Conn. Gen. Stat. § 34-259b, cga.ct.gov

Three Problems No State Transfer Rule Solves

These land the same way in Connecticut as everywhere else. One because it is federal law, two because they are contracts you signed. Which is exactly why they get left off state pages. They are also the three most likely to actually cost a landlord money, so they are here rather than buried.

The due-on-sale point is the one that generates the most bad advice. The Garn-St Germain Depository Institutions Act, at 12 U.S.C. § 1701j-3(d), bars a lender from enforcing a due-on-sale clause on nine categories of transfer of residential property of fewer than five dwelling units. The one people cite is the eighth: a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property. Neither that paragraph nor any of the other eight names a transfer to a limited liability company. The protection quoted for an LLC transfer is written for trusts, and the occupancy qualifier is the limb that matters most to a landlord, because a rental is occupied by someone else.

One honest caveat on that list. The ninth category is open-ended. It reaches any other transfer described in regulations issued under the Act, at 12 C.F.R. § 591.5(b), so it is a list that can be extended by regulation rather than a closed set fixed by the statute. We have not read those regulations end to end, and say so rather than describing the statute as more settled than we checked.

In practice lenders often do not call a loan when payments keep arriving, and that is genuinely what usually happens, but “usually not enforced” is a different thing from “not permitted,” and only one of them is a plan. The way to find out is to ask your servicer for written consent before you record, not after.

Which deed you use is a decision, not a formality. A quitclaim deed transfers whatever interest you happen to have and warrants nothing, which is why it is the cheap default for a transfer between yourself and your own company, and why title professionals warn against it. It can leave a gap in the chain of title that surfaces years later when you sell or refinance, and because it warrants nothing it gives the LLC no recourse against you if a defect turns up. A warranty deed carries the covenants across. Which one is appropriate depends on how the property was acquired and what your title history looks like, and it is a question worth asking before the deed is drafted rather than after it is recorded.

Tell your title insurer before you record. An owner’s title policy insures the person named in it. Convey the property to an LLC and the insured owner and the record owner are no longer the same. Which is the fact pattern in which coverage gets argued about at the worst possible moment, when a claim is already live. Some insurers will endorse an existing policy across to the entity, sometimes for a modest fee; some will not, and a new policy means a new premium on the current value. Either way it is a phone call before the deed rather than a discovery afterwards, and it belongs in the same budget as the tax above.

On the fourth thing people ask about: beneficial ownership reporting. Under 31 C.F.R. § 1010.380, a “reporting company” is an entity formed outside the United States and registered to do business in a State, and paragraph (c)(2)(xxiv) separately exempts any entity created by filing with a Secretary of State. A rental LLC you form in Connecticut is therefore exempt and files no beneficial ownership report. Pages telling you to file within 30 days of formation are describing the rule as it stood before March 2025. The exception runs the other way: an LLC formed in another country and registered to do business in Connecticut does still report. More on what compliance actually requires →

Does Connecticut Make You Register the Rental?

Not at the state level. Connecticut runs no statewide rental registry, so registration is a municipal question, and what a municipality may require varies, in some states a city can impose an annual licence with an inspection, and in others state law caps or forbids local registries outright. The LLC does not change the answer either way: the duty attaches to the rental unit, not to the form of the owner. Check with the city or county the property sits in.

Connecticut's version of this is a municipal option written into state law, and the Office of Legislative Research states the position plainly: "By law, municipalities may establish landlord identification registries and require certain rental housing providers to file and maintain their residential addresses with them ... A nonresident owner of a rental property (i.e., a landlord) located in a municipality that has established such a registry must file his or her residential address with the tax assessor, or other municipally-designated office." That is CGS § 47a-6a, as amended by PA 19-168.

Two limits matter for a landlord in an LLC. The duty reaches nonresident owners, not every landlord in town. And the statute anticipates entity ownership directly: "If the owner is a business entity, such as a corporation or trust, it must file the 'agent-in-charge's' residential address instead." So the LLC does not remove you from the register. It changes whose home address goes on it. Where a registry exists, failing to file is an infraction and the municipality sets the penalties.

cga.ct.gov

If You Rent Short-Term in Connecticut

A short-term let is a different tax animal from a twelve-month tenancy, and the LLC has nothing to do with it. The lodging tax follows the stay, not the owner.

The Department of Revenue Services puts the cutover on the 31st consecutive day, so a 30-night stay is fully taxable and the exemption starts the day after.

Connecticut taxes lodging through a dedicated room occupancy tax rather than through sales tax, and the Office of Legislative Research is explicit that the room occupancy tax "applies in lieu of the regular" sales tax. It replaces the sales tax on that transaction rather than stacking on top of it. A bed and breakfast establishment is taxed at a lower rate than a short-term home rental, so which category the property falls into matters.

Read the threshold in the table above carefully: the tax stops running from the day after that many consecutive days of occupancy by the same person, which means a booking one night short of the cutoff is taxed from the first night to the last, and a new guest restarts the count. On collection, a short-term rental facilitator that handled at least $250,000 of Connecticut short-term rental sales in the previous twelve months must register with DRS on Form REG-1 and file Form OP-210. That duty came in with PA 19-117 §§ 329 and 330. Airbnb has collected and remitted Connecticut room occupancy tax for its hosts under a separate agreement with DRS reached in June 2016.

A platform collecting the state tax does not always cover every local tax on the same booking, and it never covers a booking taken directly. If you take reservations off-platform as well, that is where the exposure sits.

Authority: Conn. Gen. Stat. §§ 12-407(a)(2)(H), 12-408(1)(B); PA 19-117 §§ 329-330, portal.ct.gov

Who to Ask in Connecticut

The town clerk where the property sits is the office that records the deed and takes Form OP-236 with it, and it's the right call about how that town wants an exemption claim presented and what its own municipal conveyance rate is. The Department of Revenue Services publishes the conveyance tax forms, the rulings and the controlling interest transfer tax guidance at portal.ct.gov/drs, and its rulings archive is where the pre-1999 history behind exemption code 20 is documented.

The town assessor administers the October 1 grand list, the five-year revaluation and the elderly and disabled homeowner relief programmes. For a statewide picture of what municipalities are permitted to do, the Office of Legislative Research reports on cga.ct.gov are unusually readable. Note that the site presented an untrusted certificate to us throughout, which is an obstacle for automated tools rather than for a browser.

Forming the LLC Itself

Nothing about the formation process changes because the LLC will hold rental property, the articles, the registered agent requirement and the annual filing are the same as for any other Connecticut LLC. The walkthrough lives in the formation guide rather than being repeated here.

How to start an LLC in Connecticut →

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