Topic:
LEGISLATION; ELDERLY; STATISTICAL INFORMATION; HANDICAPPED; PROPERTY TAX; TAX EXEMPTIONS;
Location:
TAX EXEMPTIONS - ELDERLY;

OLR Research Report


May 23, 2006

 

2006-R-0342

LOCAL OPTION ELDERLY PROPERTY TAX RELIEF

 

By: Judith Lohman, Chief Analyst

You asked whether towns with populations similar to Somers or that are near Somers have local optional property tax relief programs for the elderly and, if they do, for a description of the programs.

SUMMARY

Since Somers' population is 10,888, we surveyed the 19 other Connecticut towns with populations between 9,000 and 12,500 as well as three additional towns bordering Somers. The survey involved a search of town websites supplemented by telephone calls to town assessors. Of the 22 towns, 11 have local option property tax relief programs. Of these, seven provide tax credits, three offer tax deferrals, and one offers either a tax abatement or a tax deferral depending on income. All programs have income limits and most are tied to the state-mandated “circuit breaker” property tax relief program for the elderly and disabled.

STATE-MANDATED AND REIMBURSED ELDERLY PROPERTY TAX RELIEF PROGRAMS

The state funds two property tax relief programs for qualified elderly and disabled homeowners. One is the so-called “circuit breaker” program, which provides property tax credits of from $150 to $1,250 per year, depending on income and marital status. The other is the Tax Freeze program, which freezes property taxes at 1967 through 1978 levels. The tax freeze program has been closed to new applicants since 1979. The state reimburses localities for lost revenues under both of these programs.

Circuit Breaker Program

The Elderly and Disabled Homeowners' Tax Relief Program (known as the Circuit Breaker Program) provides a 10% to 50% state-reimbursed property tax reduction, depending on income, for low-income elderly and disabled homeowners. To qualify, an elderly person must be at least age 65 and have an income below specified levels. Income limits for the program are adjusted annually to reflect Social Security benefit increases. The size of the credit a person receives depends on his income.

For program applications filed in 2006, the income limits and credits are shown in Table 1.

Table 1: Circuit Breaker Tax Credits and 2006 Income Limits

Income Level

Minimum Credit

Maximum Credit

Over

To

Married

Single

Married

Single

$0

$13,800

$400

$350

$1,250

$1,000

13,800

18,600

350

250

1,000

750

18,600

23,200

250

150

750

500

23,200

27,700

150

150

500

250

27,700

33,900

150

0

250

0

The Office of Policy and Management issues revised income limits on October 30 annually for the following year. Applicants must apply for the credits with their town assessors between February 1 and May 15 of the year following the October 1 grand list for which they are seeking relief. Once approved, taxpayers must refile for benefits every two years (CGS 12-170aa, 12-170bb, and 12-170cc).

Tax Freeze Program

This program freezes property taxes for elderly (age 65 or over) homeowners with annual taxable incomes of $6,000 or less at the level the person owed when he first qualified for the program. Applicants could qualify for the 1967 through the 1978 grand lists. The program stopped accepting new applicants in 1979 but those who qualified before then continue to receive benefits as long as they still qualify. They must refile for benefits with local assessors every two years (CGS 12-129b).

OPTIONAL LOCAL PROGRAMS

State law allows towns to provide tax relief to elderly homeowners who are at least age 65 and who have been taxpayers in the town for at least a year. It imposes no income criteria and does not require towns to adopt any. But towns that choose to provide relief receive no state reimbursement for the tax revenue they forgo.

The law allows towns to provide relief to homeowners already receiving tax relief under the Circuit Breaker Program as well as to those who do not meet that program's income criteria. The tax relief can take any form, including freezing tax payments at specified levels. But the overall amount of tax relief towns can provide is limited to no more than 10% of the total value of real property in the town in each given year. And the total value of tax relief a homeowner can receive under this and the tax freeze and circuit breaker programs cannot exceed his annual tax.

A new law enacted in 2006 also allows towns to freeze the property taxes on homes owned by certain elderly people. To be eligible, the homeowner or his spouse must be age 70 or older and have lived in the state at least one year. The freeze continues for a surviving spouse who is at least age 62 when the homeowner dies. Homeowners must meet the circuit breaker income guidelines. Towns may also impose asset limits for eligibility and put a lien on the property. This new law does not take effect until October 1, 2006 (PA 06-176).

LOCAL OPTION PROGRAMS IN 11 TOWNS

As noted, our survey of 22 towns found 11 that have local option property tax relief programs for the elderly over and above the relief offered by the circuit breaker. The 11 programs can be divided into three types: tax credits, tax deferrals, and combination tax abatement and deferral.

Tax Credits

Seven towns offer local tax credits for the elderly in addition to those available from the state circuit breaker program. All the programs use the same eligibility requirements as the state program for age and method of calculating income. Some of the seven provide local credits to eligible taxpayers with incomes higher than the maximums for the state program.

East Granby. For those eligible for the state circuit breaker program, East Granby provides an additional local credit equal to the state credit. But the town limits the amount of the local credit so the total state and local credit combined does not exceed 75% of the tax owed.

Granby. Granby provides an additional tax credit over and above the state credit for those who qualify for the state circuit breaker program. It also provides a local credit to married couples with incomes between $33,900 and $46,400 and to single taxpayers with incomes between $27,700 and $34,900. The local credits for married couples range from 4% to 35% of the tax due. The singles' range is 5% to 45%. The maximum state and local credit combined is 75% of the tax due.

Old Saybrook. For those who qualify for the state circuit breaker program, the town provides aggregate property tax relief for each year up to an amount allocated in its budget for the program (e.g., for 2006 the aggregate amount is $50,000). The assessor allocates the funds among the eligible applicants according to a formula based on income and property assessment. The formula yields a dollar credit that is added to the circuit breaker credit.

Oxford. For those who qualify for the state circuit breaker, the town provides an additional credit (over and above the circuit breaker credit) that ranges from $150 to $200. It also extends the income eligibility for married couples to a maximum of $36,900. These higher income taxpayers receive only the local credit.

Prospect. For those who qualify for the state circuit breaker program, Prospect provides an additional tax credit of $200 on top of the state-reimbursed credit.

Woodbridge. Woodbridge provides a local tax credit that varies according to income. The program divides those eligible into two groups. Group I consists of those who are eligible for the state circuit breaker program. These residents receive a local credit of $1,400 on top of their circuit breaker credit. Group II encompasses those with incomes over $33,900 but not over $57,630. For Group II, the maximum credit is $1,120 unless money is insufficient, in which case, credits for this group are proportionately reduced. The local program does not distinguish between married and single taxpayers.

Woodbury. The town provides a local credit of from $200 to $1,000 in addition to circuit breaker credit. The local credit has a maximum qualifying income of $38,700 for both married and single applicants. Income is calculated in the same manner as the state program.

Tax Deferral Programs

Three towns have tax relief programs that defer all or a portion of the property tax owed. These towns place a lien on the taxpayer's property and require the deferrals to be repaid at a future date.

Coventry. Coventry has a tax deferral program for those who qualify for circuit breaker. The deferral amount is equal to circuit breaker credit. The town places a lien on the property.

Portland. Portland established a tax deferral program in 2001. To be eligible, someone must have lived in town for at least five years before applying. The program's maximum qualifying income is the state circuit breaker income limit plus $2,000. Those eligible for the state program receive up to a 75% tax deferral, including state credit. For those not eligible for the program, the maximum deferral is 50% for single and 60% for married couples.

Deferrals accrue interest annually at the federal prime interest rate for each year. The town places a lien on the property. According to the Portland assessor's office, no town residents have taken advantage of the local program.

Winchester. Winchester allows deferral of 25% of the amount of state circuit breaker tax credit. The town places a lien on property and deferral must be repaid when the property is sold. 2005 was the program's first year. Most are not interested in participating when they hear about the lien. Only seven residents are taking advantage of it, according to the assessor.

Tax Abatement And Deferral Program

Weston has both tax abatement and tax deferral programs. The tax abatement program applies to those with incomes up to $49,000. It abates 60% or 75% of the tax due.

The tax deferral program applies to those with incomes between $49,000 and $125,000. The taxpayer has up to 15 years to repay the deferred amount. The deferral percentage varies according to income as follows:

● $49,000 - $75,000 – 75% of tax due

● $75,000-$100,000 – 50% of tax due

● $100,000-$125,000 – 25% of tax due

SURVEYED TOWNS WITH NO LOCAL OPTION PROGRAMS FOR ELDERLY

Of the towns surveyed, the following 11 have no local option property tax relief programs for the elderly:

Canton

East Hampton

East Windsor

Ellington

Enfield

Griswold

Hebron

Putnam

Stafford

Thompson

Windsor Locks

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