OLR Bill Analysis

sHB 5035

AN ACT REDUCING MANDATES FOR MUNICIPALITIES.

SUMMARY:

This bill explicitly authorizes municipalities to impose property taxes on structures that are partially completed or under construction.

EFFECTIVE DATE: October 1, 2012, and applicable to assessment years beginning on or after that date.

PROPERTY TAX ON PARTIALLY CONSTRUCTED HOUSES AND OTHER BUILDINGS

The bill explicitly makes partially completed structures or structures under construction (e. g. , a house being built) subject to municipal property tax.

Under current law, it is unclear whether a town's assessor may include the value of partially completed structures and improvements in a property's assessment. While tax assessors have commonly assessed buildings that are under construction the question of whether state law authorizes them to do so is the subject of a court case decided by the Superior Court but currently under appeal (see BACKGROUND).

Under current law, non-exempted structures, such as residential homes, garages, barns, commercial buildings, and all other building lots and improvements on them are taxable at a uniform percentage of their present true and actual value, not greater than 100%, as an assessor determines. The law requires assessors assess property for 70% of that value (CGS 12-62a). Under the bill, an assessor must determine the value of partially completed improvements to a structure and tax them accordingly.

Current law directs how tax assessors and tax collectors must treat new real estate construction that is completed after the October 1 assessment date. If the property was under construction on that date, it becomes taxable on either the date the certificate of occupancy is issued or the date the structure is first used for the purpose for which it was constructed, whichever is earlier, prorated for the assessment year in which the new construction is completed. The bill specifies that, on October 1, the municipal tax is based on the assessed value of the (1) completed new construction or (2) partially completed portion.

The bill also makes conforming changes.

BACKGROUND

Superior Court Case on Taxing Structures that are under Construction

The case of Kasica v. Town of Columbia concerns a partially constructed house on a 3. 44 acre lot in Columbia, Connecticut. In 2008, Columbia's assessor valued the land at $ 255,000 and the improvements (35% complete) at $ 569,500. The property owner appealed the assessor's valuation to the court, alleging, in part, that the assessor violated CGS 12-53a by taxing the partially completed house.

The court ruled that without the issuance of a certificate of occupancy by the building inspector, there was no statutory authority for the assessor to (1) value the subject premises as partially improved and (2) add this amount to Columbia's assessment rolls.

Legislative History

The House referred the bill (File 51) to the Finance, Revenue and Bonding Committee, which reported a substitute that eliminates the provisions on (1) an insurance tax break on certain municipal policies and (2) the timeline for, and cost of, storing evicted tenants' and foreclosed homeowners' possessions.

COMMITTEE ACTION

Planning and Development Committee

Joint Favorable Substitute

Yea

15

Nay

5

(03/02/2012)

Finance, Revenue and Bonding Committee

Joint Favorable Substitute

Yea

34

Nay

16

(04/16/2012)