In a ruling by the Department of Revenue Services for the State of Connecticut, new tax legislation was recently passed concerning nonresidents owning real estate in Connecticut.
Within this new legislation, real and tangible personal property located in Connecticut will be included in the taxable estate of a nonresident decedent even if owned through a pass through entity in whatever proportion it was owned. (A pass through entity is an S corporation, Partnership or Single Member LLC).
For example, if the decedent owned 10% of the stock or membership interest, than 10% of the value of the entity will be included in the taxable Connecticut estate.
This applies to real property and tangible personal property owned by a pass-through entity if:
- the entity does not own the business for purposes of profit and gain
- the ownership of the property by the entity is not for a valid business purpose
- the property was gifted to another party, but the decedent retained enough powers over that property to cause it to be included in their Federal taxable estate