For What It May Be Worth

While the recently concluded 2023 legislative session focused largely on other forms of taxation, the Connecticut General Assembly did pass several noteworthy acts regarding property taxation.

Income and Expense Reports

The owners of rental income producing real estate in Connecticut are generally required to file annual income and expense reports by June 1 of each year for the preceding calendar year.  The failure to timely file the report will produce a 10% assessment penalty.  Public Act No. 23-152 clarified certain requirements regarding the filing of these reports and the imposition of penalties as follows:

• Taxpayers now have until June 1 (the due date) to request an extension to file the report. The assessor can extend the deadline to July 1.
• It is now clear that an income and expense report is considered timely filed if postmarked on or before the due date.
• The 10% penalty will now be reflected on the next property tax bill or on a specially issued bill rather than on the next October 1 grand list. This means that the penalty will be payable much closer in time to the due date of the relevant report.

Tax Abatement for Certain Conservation Easements

Municipalities are authorized to create a property tax abatement program for recreational trails that meet certain criteria and are the subject of a permanent conservation restriction recorded on the land records.  This authorization is effective with the October 1, 2023 grand list.  Public Act No. 23-207, Sec. 1. 

Taxation of Workforce Housing

As part of an effort to promote the development, rehabilitation and continued operation of workforce housing, the General Assembly has mandated that assessors value this type of property by using "the capitalization of net income method based on the actual rent received for the property" as opposed to using market rents.  Municipalities have also been authorized to provide newly constructed or substantially rehabilitated workforce housing with a property tax exemption of up to 70% for seven full assessment years.   The municipal revenue loss caused by such an exemption will be partially reimbursed by a state grant in lieu of taxes.  Public Act No. 23-207, Secs. 29, 32, 33.

Property Tax Study Groups Created

The following three property tax-related study groups were created:

• Task force to study the feasibility of eliminating the property tax on motor vehicles and replacing the resulting lost revenue. The task force's report is due to the General Assembly by February 1, 2024.  Special Act No. 23-24.
• Task force to review the proceedings of local boards of assessment appeals. The mandate of the task force is to identify problems and inefficiencies in the proceedings of those boards, recommend statutory changes to address identified issues and explore the feasibility of replacing the current system with a "professional, independent appeals system".  The task force's report is due to the General Assembly by January 1, 2024.  Public Act No. 23-204, Sec. 386.
• A working group "to examine the taxation of reservation land held in trust for federally recognized Indian tribes in the state and tangible personal property located on such reservation land".  The working group's report is due to the General Assembly by January 1, 2024.  Public Act No. 23-204, Sec. 359.

Please contact Greg Servodidio or any member of the Property Tax and Valuation practice should you have any questions.