DRS: IP 97(9.1), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been cited in IP 99(3);
modified and superseded by IP 99(34)

IP 97(9.1)

Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision


PURPOSE: This Informational Publication is intended to answer commonly-asked questions about the income tax credit for property taxes paid to a Connecticut political subdivision. The income tax credit is effective for taxable years beginning on or after January 1, 1998.


WHAT IS THE INCOME TAX CREDIT FOR PROPERTY TAXES PAID TO A CONNECTICUT POLITICAL SUBDIVISION?

If you are a Connecticut resident and you own your primary residence and made qualifying property tax payments on your primary residence or on a privately owned or leased motor vehicle, you may be eligible to claim a credit against your 1998 Connecticut income tax liability. For taxable years beginning on or after January 1, 1998, the maximum property tax credit is $350 per return.


WHAT ARE QUALIFYING PROPERTY TAX PAYMENTS?

Qualifying property tax payments are payments of property taxes on your primary residence or privately owned motor vehicle:

  • that you made during 1998 to a Connecticut political subdivision and for which you are liable (or if you file a joint return with your spouse, for which you, your spouse, or both of you are liable) on your primary residence or privately owned motor vehicle; and
  • that first became due during 1998, including supplemental property taxes on a motor vehicle that first became due during 1998. Where property taxes are due and payable in two or more installments, each installment is first due on the date designated by the Connecticut political subdivision as the date when such installment is due and payable.

If a Connecticut political subdivision designates that an installment is due and payable during 1998, the installment will be first due during 1998 and will qualify for the credit if paid during 1998.


Example 1: Susanís primary residence is in a town that allows property taxes to be paid in two installments: July 1, 1997, and January 1, 1998. Susan pays the second installment during 1998. Susan is eligible to claim a credit on her 1998 Connecticut income tax return for her payment of the second installment, but would not be eligible to claim a credit on her 1998 Connecticut income tax return for the second installment if she paid it during 1997.

If a Connecticut political subdivision designates that an installment is due and payable during 1999, but an earlier installment of those property taxes first became due during 1998, you may choose to treat the 1999 installment as first becoming due during 1998 if you paid it during 1998. On the other hand, if you paid the 1999 installment during 1999, you may not use the payment in calculating the 1998 property tax credit, but you may use the payment in calculating the 1999 property tax credit.

Example 2: Marieís primary residence is in a town that allows property taxes to be paid in four installments: July 1, 1998, October 1, 1998, January 1, 1999 and April 1, 1999. Marie pays the first two installments during 1998. Marie is eligible to claim a credit on her 1998 Connecticut income tax return for her payment of the first two installments. If Marie pays the third installment during 1998, she is also eligible to claim a credit on her 1998 Connecticut income tax return for her payment of the third installment, but would not be eligible to claim a credit on her 1998 Connecticut income tax return for the third installment if she paid it during 1999.

Payments of property taxes on your privately leased motor vehicle are also qualifying property tax payments, if you or the leasing company made the payments of property taxes during 1998 to a Connecticut political subdivision and if those property taxes first became due during 1998.

Qualifying property tax payments do not include any interest, fees or charges related to property taxes.


WHAT LIMITATIONS APPLY TO THE CREDIT?

If you made $100 or less in qualifying property tax payments, your credit is limited to the lesser of:

  • The amount of qualifying property tax payments that you made; or
  • Your 1998 Connecticut income tax liability as reported on your 1998 Form CT-1040, Line 10; or your 1998 Form CT-1040EZ, Line 4; or as computed by the Connecticut Telefile System.

If you made more than $100 in qualifying property tax payments and if any of the following conditions apply, your credit may be limited based on your filing status and your Connecticut adjusted gross income. You must complete the Property Tax Credit Limitation Worksheet that is included with your Connecticut resident income tax return instructions booklet to calculate the amount of credit that you are allowed if:

  • Your filing status is "Single" and your Connecticut adjusted gross income is greater than $52,500; or
  • Your filing status is "Married filing separately" and your Connecticut adjusted gross income is greater than $50,250; or
  • Your filing status is "Head of household" and your Connecticut adjusted gross income is greater than $78,500; or
  • Your filing status is "Married filing jointly" and your Connecticut adjusted gross income is greater than $100,500.

The amount of credit may not exceed your Connecticut income tax liability as reported on your 1998 Form CT-1040, Line 10, or your 1998 Form CT-1040EZ, Line 4, or as computed by the Connecticut Telefile System.


MAY I CLAIM THE CREDIT IF I DID NOT MAKE QUALIFYING PROPERTY TAX PAYMENTS TO A CONNECTICUT POLITICAL SUBDIVISION DURING 1998?

No.


MAY I CLAIM THE CREDIT IF I DID NOT HAVE A CONNECTICUT INCOME TAX LIABILITY IN 1998?

No. If your Connecticut income tax liability as reported on your 1998 Form CT-1040, Line 10, or Form CT-1040EZ, Line 4, or as computed by the Connecticut Telefile System is zero, you are not eligible for a credit. The credit is not refundable and may not be carried forward.


WHAT IS MY PRIMARY RESIDENCE?

Your primary residence is your principal place of abode, but in order to qualify for the credit, the title to your primary residence must be in your name (or, if you along with another person or persons own the residence, the title must be in your names) and your primary residence must be located within Connecticut. If your primary residence is rented by you from someone else, you are not eligible to claim the credit even if your landlord bills you for the property taxes. Likewise, you may not claim the credit for property taxes that you pay on a second home, vacation home or investment property.


WHAT IS A PRIVATELY OWNED OR LEASED MOTOR VEHICLE?

It is a motor vehicle, as defined by Conn. Gen. Stat. ß14-1, that includes cars, motorcycles, trucks, and any other vehicle that is suitable for operation on a highway and that could be registered for motor vehicle registration purposes, whether or not the vehicle is so registered. For example, a motor home that could be registered for motor vehicle purposes (whether or not it is so registered) and that is suitable for operation on a highway is a motor vehicle. An antique car that could be registered for motor vehicle purposes (whether or not it is so registered) and that is suitable for operation on a highway is a motor vehicle. For the motor vehicle to be considered privately owned, the title to the motor vehicle must be in your name (or, if you along with another person or persons own the vehicle, the title must be in your names). For the motor vehicle to be considered privately leased, the lease for the motor vehicle must identify you as the lessee (or, if the motor vehicle is leased to you along with another person, the lease must identify you and such other person as the lessee).

If you lease a motor vehicle from a leasing company or anyone else, you are eligible to claim the credit (even if the leasing company pays the property taxes on your leased motor vehicle) if all of the following conditions are met:

  • You had a written lease agreement for a term of more than one year; and
  • You or the leasing company made qualifying property tax payments during 1998; and
  • You lawfully possessed the motor vehicle when the taxes first became due.

WHAT IS A CONNECTICUT POLITICAL SUBDIVISION?

It is a Connecticut city or town or any tax district in a Connecticut city or town.


HOW DO I KNOW THE AMOUNT OF QUALIFYING PROPERTY TAX PAYMENTS ON MY LEASED MOTOR VEHICLE?

Qualifying property tax payments made during 1998 either by you or the leasing company are eligible for the credit. You must refer to the January 1999 billing statement from your leasing company to determine the amount of property taxes that may be eligible for the credit. Your statement will either indicate the amount of property taxes paid on your leased motor vehicle or provide you with a toll-free number that you may call to obtain the necessary information. If you do not receive a billing statement in January 1999, contact your leasing company for the appropriate property tax information.


IF I AM MARRIED, HOW DOES MY INCOME TAX FILING STATUS AFFECT THE AMOUNT OF THE CREDIT?

Joint Return

If you and your spouse are both Connecticut residents and file a joint federal income tax return, you and your spouse must file a joint Connecticut income tax return. The credit on your joint Connecticut income tax return may not exceed $350. If you or your spouse, or both of you, lease a motor vehicle or own (whether as joint tenants with right of survivorship or as tenants in common) your primary residence or privately owned motor vehicle, you may claim the credit on your 1998 Connecticut income tax return as long as you or your spouse, or both of you, made qualifying property tax payments during 1998 on such property.

Separate Returns

If you and your spouse are Connecticut residents and each of you files a separate federal income tax return, each of you must file a separate Connecticut income tax return.

The credit on your separate Connecticut income tax return may not exceed $350 (and the credit on your spouseís separate Connecticut income tax return may not exceed $350).

You may make qualifying property tax payments with respect to property that you own or with respect to a privately leased motor vehicle of which you are the lessee. If you do not own your primary residence or you are not the owner of a privately owned motor vehicle (or the lessee of a privately leased motor vehicle), you may not claim the credit even if you paid the property taxes during 1998.

Similarly, if your spouse does not own the property that you refer to as your primary residence or your spouse is not the owner of a privately owned motor vehicle (or the lessee of a privately leased motor vehicle), your spouse may not claim the credit even if your spouse paid the property taxes during 1998.

If you and your spouse own your primary residence together, or if you and your spouse own a privately owned motor vehicle together (or lease a privately owned motor vehicle together), see the next question.


WHAT IF I OWN MY PRIMARY RESIDENCE OR A PRIVATELY OWNED MOTOR VEHICLE WITH ANOTHER PERSON?

Joint Tenancy

If the property is joint tenancy (with right of survivorship) property, each joint tenant is liable for the full amount of the property tax and is eligible to claim a property tax credit of up to $350 if that person made qualifying property tax payments on the property at least equaling the credit claimed.

Example 1: You and your sister own a motor vehicle as joint tenants with a right of survivorship. You and your sister receive a property tax bill for $600 first due on July 1, 1998 from a Connecticut municipality on that vehicle. You paid $480 of that bill during 1998, and your sister paid $120 of that bill during 1998. On your Connecticut income tax return, you claim that your filing status is "Single" and report Connecticut adjusted gross income that is less than $52,500. On your sisterís Connecticut income tax return, she claims that her filing status is "Single" and reports Connecticut adjusted gross income that is less than $52,500. While you made qualifying property tax payments of $480, your credit may not exceed $350. You may claim a credit of $350 or the amount of your Connecticut income tax liability as reported on your 1998 Form CT-1040, Line 10, or your 1998 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System, whichever is less.

Your sister made qualifying property tax payments of $120 and may claim a credit of $120 or the amount of her Connecticut income tax liability as reported on her 1998 Form CT-1040, Line 10, or her 1998 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System, whichever is less.

Tenancy in Common

If the property is tenancy in common property, each tenant in common is liable for the property taxes but only to the extent of that personís interest in the property. Each is eligible to claim the credit of up to $350 if that person made qualifying property tax payments on the property at least equaling the credit claimed (but not exceeding that personís liability for the property tax).

Example 2: You and your cousin each own an undivided one-half interest, as tenants in common, in a house that is a primary residence for both of you. You and your cousin receive a property tax bill for $800 first due on July 1, 1998 from a Connecticut municipality on that property. You paid $500 of that bill during 1998, and your cousin paid $200 of that bill during 1998 and $100 of that bill during 1999. On your Connecticut income tax return, you claim that your filing status is "Single" and report Connecticut adjusted gross income that is less than $52,500. On your cousinís Connecticut income tax return, he claims that his filing status is "Single" and reports Connecticut adjusted gross income that is less than $52,500.

While you made property tax payments of $500, only $400 of those payments were qualifying property tax payments. (Each tenant in common is liable for the property taxes but only to the extent of that personís interest in the property, so that you are liable for only half ($400) of the property tax bill ($800).)

However, your credit may not exceed $350. You may claim as a credit the lesser of $350, or the amount of your Connecticut income tax liability as reported on your 1998 Form CT-1040, Line 10, or your 1998 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System. While your cousin made property tax payments of $300, only $200 of those payments were qualifying property tax payments because only $200 was paid by your cousin during 1998. Your cousin may claim as a credit the lesser of $200, or the amount of his Connecticut income tax liability as reported on his 1998 Form CT-1040, Line 10, or 1998 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System.


MAY I CLAIM THE CREDIT IF I USED A BUILDING AS MY PRIMARY RESIDENCE AND FOR SOME OTHER PURPOSE?

Yes, but you will need to perform a calculation to figure the amount of property taxes that you can use for determining your property tax credit. If your circumstances are the same as those described in either of the following examples, you must perform the calculation.

Example 1: Herb used part of a building that he owned as his primary residence for the entire taxable year and the rest of the building as rental property for the entire taxable year. Herb must perform a calculation to figure the amount of property taxes that he can use for determining his property tax credit.

Example 2: Jennifer used a building that she owned as her primary residence for part of the year and to carry on a trade or business (and not as her primary residence) for the rest of the year. Jennifer must perform a calculation to figure the amount of property taxes that she can use for determining her property tax credit.

Calculation

To calculate the amount of property taxes on the building that are eligible for the credit, multiply the property taxes that you paid during the taxable year on the building by the following fraction. The numerator of the fraction is the amount of property taxes that you paid during the taxable year on the building and that is deductible from your federal adjusted gross income on federal Schedule A, Itemized Deductions. The denominator of the fraction is the sum of (1) the amount of property taxes that you paid during the taxable year on the building and that is deductible from your federal gross income as a trade, business or rental property expense and (2) the amount of property taxes that you paid during the taxable year on the building and that is deductible from your federal adjusted gross income on federal Schedule A, Itemized Deductions. The product is the amount of property taxes on the building that you can use in determining your property tax credit.


MAY I RECEIVE A REFUND OR CARRY FORWARD THE EXCESS TO MY 1999 CONNECTICUT INCOME TAX RETURN IF I MADE PROPERTY TAX PAYMENTS IN EXCESS OF MY TAX LIABILITY?

No. The maximum credit allowed is $350, and any excess may not be refunded or carried forward.


MAY I CLAIM THE CREDIT ON MORE THAN ONE PRIVATELY OWNED OR LEASED MOTOR VEHICLE?

Yes, if your filing status for Connecticut income tax purposes is "Married filing jointly," you may include qualifying property tax payments on up to two privately owned or leased motor vehicles. If your filing status for Connecticut income tax purposes is "Single," "Married filing separately," or "Head of household," you may include qualifying property tax payments on one privately owned or leased motor vehicle.


MAY I CLAIM THE CREDIT IF I PAY PROPERTY TAXES ON ANOTHER PERSONíS PRIMARY RESIDENCE OR PRIVATELY OWNED OR LEASED MOTOR VEHICLE?

No, unless that other person is your spouse and you and your spouse are required to a file a joint Connecticut income tax return. (See If I am Married, How does my Income Tax Filing Status Affect the Amount of the Credit).


MAY A NONRESIDENT OR A PART-YEAR RESIDENT CLAIM THE CREDIT?

No. Only Connecticut resident individuals are eligible to claim the credit. Resident trusts or estates are also not eligible.


WHAT RECORDS SHOULD I KEEP TO SUBSTANTIATE THE CREDIT I CLAIMED?

A receipt from the Connecticut political subdivision, a billing statement from your leasing company, your canceled check in payment of property tax, or a federal Form 1098 from your bank or mortgage company (if property tax is included in your monthly mortgage payments) is sufficient to support your claim for credit. Do not attach these records to your Connecticut income tax return. Keep these records for at least three years from the due date (or, if you request an extension of time to file your return, from the extended due date) of your return.


WHAT IF I AM NOT A CALENDAR YEAR TAXPAYER FOR FEDERAL INCOME TAX PURPOSES?

Most individuals use the calendar year as their taxable year for federal income tax purposes and, therefore, for Connecticut income tax purposes. However, in the unlikely event that you use a fiscal year (other than the calendar year) as your taxable year for federal income tax purposes (and, therefore, for Connecticut income tax purposes), you may claim the credit for property taxes that first became due during your taxable year beginning during 1998, and that you paid during your taxable year beginning during 1998. Wherever this Informational Publication refers to "1998," substitute "your taxable year beginning during 1998."


 WHAT IF I AM NOT A CASH BASIS TAXPAYER FOR FEDERAL INCOME TAX PURPOSES?

Most individuals are cash basis taxpayers for federal income tax purposes and, therefore, for Connecticut income tax purposes. However, in the unlikely event that you are an accrual basis (rather than a cash basis) taxpayer for federal income tax purposes (and, therefore, for Connecticut income tax purposes), you may claim the credit for property taxes for which you are liable (because you own a primary residence or a privately owned motor vehicle or lease a privately leased motor vehicle) and which first became due during 1998 and which were paid during 1998.


EFFECT OF THIS DOCUMENT:  An Informational Publication is a document that addresses frequently-asked questions about a current Department position, policy or practice, usually in a less technical format.


EFFECT ON OTHER DOCUMENTS:  IP 97(9), Q & A: Income Tax Credit for Property Taxes Paid to a Connecticut Political Subdivision, is obsolete for taxable years beginning on or after January 1, 1998.


FOR FURTHER INFORMATION:  If you have questions about Connecticut taxes, please call the Department of Revenue Services during business hours, Monday through Friday:

  • 1-800-382-9463 (in-state); or
  • 860-297-5962 (anywhere)

TTY, TDD and Text Telephone users only may transmit inquiries 24 hours a day, seven days a week by calling 860-297-4911.


FORMS AND PUBLICATIONS: You may obtain forms and publications at any hour, seven days a week:

  • Internet: preview and download forms from the DRS Web site: http://www.ct.gov/drs;
  • Telephone: use the phone numbers listed above and select Option 2 from a touch-tone phone.

IP 97(9.1)
Income tax
Property tax credit
Issued: 2/03/99