OLR Rerport 2012-R-0104 (1) summarizes the different types of property tax relief for homeowners under Connecticut law and (2) examples of property tax relief offered in other states but not Connecticut.
Connecticut law requires municipalities to provide property tax relief mainly for specific groups of homeowners, including the disabled, the elderly, and veterans (i.e. mandatory programs). It also gives municipalities the option to provide additional relief to these groups and extend relief to firefighters and emergency personnel, surviving spouses of firefighters and police officers, and homeowners whose property taxes exceed 8% of income. Some homeowners are eligible for a state income tax credit for property tax paid.
Most of the other states also provide residential property tax relief to the elderly and veterans and some offer relief to other groups, such as low- and moderate-income homeowners. Most do so by using the same types of mechanisms as Connecticut. But, most also use a mechanism that Connecticut does not use.
The four types of mechanisms are: homestead exemptions and credits, circuit breakers, tax freezes, and tax deferrals. Connecticut does not provide any form of homestead relief. Homestead relief programs are the most widely used forms of property tax relief and operate by exempting a portion of a property's value from taxation or rebating a portion of the tax paid.
A “circuit breaker” program prevents the amount of property taxes a homeowner pays from exceeding a specified portion of income. The amount of relief depends on the property owner's income and marital status. Connecticut has a sliding scale circuit breaker program specifically for elderly homeowners, but other states have programs that target a broader group or use a threshold approach rather than a sliding scale approach.
A “tax freeze” program freezes property tax at a specific year. Some states freeze the property tax due, while others freeze the assessed value. Connecticut instituted a tax freeze program in 1965, but began to phase it out in 1979. Other states have active programs.
Tax deferral programs allow eligible homeowners to defer payment of property taxes until a specified date. Connecticut allows municipalities to defer property taxes, but other states require them to do so.
For more infomration, read the full report.
