With affordable homes and a booming job market, many investors agree that Connecticut is a great place to invest in real estate.
However, homeowners, landlords, and property managers must have a comprehensive understanding of property tax laws that apply in the state to ensure that they remain compliant.
Property taxes also have a direct impact on your bottom line, so it's not an issue to be taken lightly. You must ensure that you understand how your taxes are calculated, what the property tax rate is, when they must be paid, how to pay your tax bill, and whether there are legal ways to save on the cost.
In this guide, we'll provide this information and more to ensure that you are equipped with the knowledge you need to successfully navigate your property taxes, whether it's personal property or real property.
From calculation formulas to mill rates and laws, when it comes to Connecticut property tax, we have it all here.
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Understanding Property Tax in Connecticut
All property taxes in Connecticut are administered solely by towns and cities. Although the state does oversee the process, property owners engage with local officials.
Assessors are appointed by the local municipality to appraise property and establish its fair market value. This is required by law to be performed every five years, but evaluations may be more frequently performed.
Once the fair market value of a piece of property has been determined, an assessment ratio of 70 percent is used. This means that the assessed value of a property will be 70 percent of its current market value. The homeowner pays taxes on the lesser assessed value rather than the market value.
Connecticut municipalities assess property taxes based on mill rates. A mill rate is equal to one dollar in taxes per $1,000 of the assessed value of a home. Divide the assessed value of your property by 1,000 and multiply this amount by the mill rate to determine your taxes.
How Many Times a Year Do You Pay Property Taxes in Connecticut?
Property taxes in Connecticut are normally paid semi-annually, which is twice a year. Property tax payment deadlines vary by municipality, so you will need to contact your local tax assessor's office to learn more about the due dates for property tax payments.
In general, property tax bills are typically paid in two installments, with payments due around the first of July and the first of January of each year. These dates can differ significantly based on the municipality or city. Therefore, it's important to understand the deadlines set in place by your local municipality.
Failure to pay property taxes on time may result in penalties and interest charges, so you must ensure that you are up to date.
The Consequences of Late Payments
That brings us to our next point: the consequences of paying your property taxes late.
Keep in mind that local rules for late or non-payment may differ according to your local municipality, so ensure that you check with your local assessor's office for confirmation about the consequences.
For example, in Madison, Connecticut, past due payments incur a penalty at a rate of 1.5% per month.
How to Pay Taxes in Connecticut
There is a wide range of options for paying your taxes in Connecticut.
However, since each city or town manages property taxes, you will need to check with local governments to learn more about the payment options available in your state. Both online and in-person payment options are usually available.
How Much Is Property Tax in Connecticut?
Connecticut residents pay some of the nation's highest property taxes. In fact, the state's average property tax rate (taxes as a proportion of home value) is 1.96 percent, representing the third-highest property taxes in the country compared to the national average. There are a number of factors that influence property tax in the state, and you will need to have a good understanding of each one.
In the section below, we'll discuss the mill rate and some of other factors in greater detail to ensure that you have a better understanding of what drives property tax rates in Connecticut.
Assessed Value of the Property
The assessed value of the property plays the most significant role in determining the tax rate. The assessed value of your home is determined by the local tax assessor's office. It is an estimate of its fair market value. The higher the assessed value, the higher your tax amount.
The Mill Rate
Each town in Connecticut determines its own mill rate, which is a tax rate that is used to the assessed value of the home to determine the property tax you pay. Property taxes rise when the mill rate increases.
Local Tax Policies
Local governments may establish policies or initiatives that have an impact on property taxes. Tax abatement programs, tax incentives for specific developments, or additional taxes or assessments for specified services or improvements to infrastructure are examples of these.
The Classification of Your Property
Residential property is taxed differently from commercial property, so your property tax rates will also depend on the type of building you have. Multi-family homes and other types of residential dwelling units may also be taxed differently.
Improvements to Your Home
If you have made considerable improvements to your home by renovating it or building an additional structure, such as a garage, you can expect to pay more on your property taxes. That's because these improvements will increase the value of the property, which has a direct impact on your taxes.
How Is Property Tax Calculated in Connecticut?
Property taxes will depend on a number of factors, so you will need to visit your local assessor's office or look at your tax bill for a more accurate representation of your real property tax amount.
However, to get an idea of what you can expect, you can calculate your property tax amount by multiplying the assessed amount for your taxable property by the mill rate. Then, take this value and divide it by 1,000 to get your property tax amount.
How to Lower Property Taxes in Connecticut
You can explore the various exemptions and options for tax savings available to ensure that you are saving money. In the section below, we'll discuss some of the best ways to reduce your property tax rate without breaking the law.
Appeal the Property Assessment
If you believe that the assessed value of your personal property has been inflated, then you may file an appeal. Since this value has a significant impact on the tax you pay, it can significantly reduce your tax rate.
Explore the Exemptions Available
There are a number of exemptions offered in Connecticut, so it's worth looking into these to determine whether there are any you qualify for. Some examples of tax exemptions in Connecticut include the following:
- Tax exemptions for veterans and disabled veterans
- Surviving spouses of veterans
- Exemptions for active duty members
- Legally blind or disabled persons may qualify for an exception
To learn more about these exemptions, contact your local assessor's office.
Enquire About Disaster Relief
When there is a natural disaster, some municipalities offer property tax relief for homeowners, so be sure to enquire about this if there has been a disaster declared in the area.
Connecticut is the state of choice for many property investors, homeowners, and landlords because of its vast outdoor recreational opportunities, its great public schools, and affordable property prices. However, property taxes are a lot higher in this state than in many other areas in the country, so it's important to pay attention to the laws and regulations surrounding real estate taxes.
By ensuring that you are up to date with your taxes, you can safeguard your investment and avoid penalties. Make sure you are following up with your local county and city to ensure that you are compliant and explore all avenues for legal tax exemptions or reductions to save on property tax in Connecticut and increase your bottom line.
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.