Will CT Property Taxes Go Down?

Everyone asks me this question, so I thought it would be a good time to discuss it as there seems to be lot of confusion  - the short answer is, unfortunately, no. Lower CT property values do not mean your property taxes will go down.   The value of your home does not determine the budget for the Ct city or town you live in – and the money for the budget needs to be raised no matter what our homes are valued or assessed at.

CT Tax Assessments 

This is the way it works: The  tax assessor of each and every Connecticut town and city is required to list the value of all properties by Oct. 1st of every year. This is called the GRAND list – not sure what is so grand about it, but that is what it is called.  Every year all the new construction is added to the list,  increased home values when additions and improvements are made to are added in, as well as land development, etc.  Even without doing property revaluations, in a busy, upswing economy, this all adds up to a bigger GRAND list. 

Towns and cities are then required to completely re-evaluate the value of all properties at least once every 5 years.  The value is based on the current fair market value comparison of properties in your CT city/town.  So, you are thinking – great! My town is doing a revaluation this year…and obviously property values have gone down…which means that so will my taxes!! Happy days!

GOOD Plan – just doesn’t work that way

Here’s the problem with that plan – it’s called “THE BUDGET.” And guess what? Connecticut kids still need to be educated, police and firemen are needed, town employees (yes, tax collector included) still need to be paid, etc., etc., ETC. 

Happy Economy – what happens?

 Now when the economy is buzzing, lots of new homes are built and people are remodeling and adding on and improving their homes. The collected taxes just naturally go up, and you may not even notice that your city or town may be spending more money (not that they would……) because “your” property taxes have not increased by much.

UNhappy Economy – what happens?

Soooooo………..when the real estate market and the economy turn south - meaning real estate sales are down - new construction is at a halt, and fewer people are buying new things, including cars (which also translates into more taxes) or spending big money improving their homes, the influx of money goes down. 

CT also has this ADDITIONAL tax – sorry

There is an additional tax that goes to the city and state when you sell a home in CT. Just a little bonus the government has for you. Lawmakers voted to increase the tax a few years ago on a “temporary” basis.  Now I know you will be shocked to hear that it has never gone back down, even though they promised us it would……….!  So, in the current market with sellers making far less than they had hoped and many having to bring money to the closing table, they also have to PAY the government for the right to sell their home. It just doesn’t seem right to me, but I digress.

The real point here is that with LESS homes selling, and for LESS money, this is another tax that is not filling the coffers as much as it did a few years ago – so what’s CT to do? 

Bills still have to be paid and CT children still have to educated

Well,  basically they have to figure out how to get the money needed –  the UConn area cities and towns still need money, a LOT of money (see, we started this, now we have to keep feeding it). Even with budget cuts, there is still a lot of moola needed to run everything.  So – Voila! Here’s where the MILL rate come in to play – it can be increased in order to meet “THE BUDGET.” 

Of course, when times are good it can be DECREASED too – somehow that never seems to happen…….not sure why……again, I digress.

What’s a Mill Rate?

The mill rate is pretty simple. If your town’s mill rate is set at 23, for every $1,000 of the assessed value on your property, you pay $23 in taxes.  So…if the property values in your area go down, the town will probably increase the mill rate to make up the money needed to meet “THE BUDGET” - see,  you just can’t win can you?  THIS is why people worry about the mill rate – a mill rate of $23 on a home assessed at $400,000 is $9,200 a year. Compare this to the same home assessment value in a different town with a mill rate of $36 -  the taxes are $14,400 a year. BIG difference.

I could go on, but I think this is good for a quick overview. Let me know if you have any questions. The long and short of it is this – taxes pay the costs of running each and every town and city in Connecticut. So, the money needed doesn’t typically go down significantly just because your house value went down. There are other ways for CT towns to collect the money needed for “THE BUDGET!”   Like Benjamin Franklin said: “Nothing is certain but death and taxes!”