DRS: IP 97(9), Q & A: Income Tax Credit for Property Taxes Paid to a Political Subdivision

 

STATE OF CONNECTICUT
DEPARTMENT OF REVENUE SERVICES

450 Columbus Blvd
Hartford CT 06103
 
 
 
 
 
 

 
 

This Informational Publication has been obsoleted by IP 97(9.1)

IP 97(9)

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


PURPOSE: This Informational Publication is intended to answer commonly-asked questions about the new income tax credit for property taxes paid to a Connecticut political subdivision. The new income tax credit is effective for taxable years beginning on or after January 1, 1997, and replaces the tax credit ("the prior credit") for property taxes paid to a Connecticut political subdivision that was in effect for the taxable year beginning during 1996 only. (The prior credit allowed a $100 maximum credit against Connecticut income tax for property taxes paid to a Connecticut political subdivision during 1996 and was described in IP 96(9), Q & A Property Tax Credit.)


WHAT IS THE NEW 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 1997 Connecticut income tax liability. The maximum credit allowed is $215 per return filed, regardless of filing status.


WHAT ARE QUALIFYING PROPERTY TAX PAYMENTS?

Qualifying property tax payments are payments that you made during 1997 of property taxes which first became due on or after July 1, 1997, and for which you are liable to a Connecticut political subdivision on your primary residence or privately owned motor vehicle. With respect to a privately leased motor vehicle, qualifying property tax payments include payments that you or your leasing company made during 1997 of property taxes which first became due during 1997 to a Connecticut political subdivision on your privately leased motor vehicle. Qualifying property tax payments also include payments that you made during 1997 of any supplemental property tax bills which first became due during 1997 and for which you are liable to a Connecticut political subdivision on a privately owned or leased motor vehicle. However, qualifying property tax payments do not include a payment of the second installment of a property tax bill first becoming due during 1996, even if paid during 1997, or the payment during 1997 of any delinquent property tax bills that were first due prior to July 1, 1997.


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 following amounts:

  • the amount of qualifying property tax payments, or
  • your 1997 Connecticut income tax liability as reported on your 1997 Form CT-1040, Line 10; or your 1997 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, the credit that you are allowed 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 separate" 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 joint return" and your Connecticut adjusted gross income is greater than $100,500.

The amount of credit also may not exceed your Connecticut income tax liability as reported on your 1997 Form CT-1040, Line 10, or your 1997 Form CT-1040EZ, Line 4, or as computed by the Connecticut Telefile System.


IF I DID NOT MAKE ANY QUALIFYING PROPERTY TAX PAYMENTS TO A CONNECTICUT POLITICAL SUBDIVISION DURING 1997, AM I ELIGIBLE FOR THE CREDIT?

No.


IF I HAD NO CONNECTICUT INCOME TAX LIABILITY IN 1997, AM I ELIGIBLE FOR THE CREDIT?

No. If your Connecticut income tax liability as reported on your 1997 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, e.g., a house, an apartment, or a condominium. To qualify for the credit, you must own your primary residence; that is, 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 a house, condominium unit or apartment that you rent from someone else, you are not eligible to claim the credit (even if your landlord bills you for the property taxes on the house, unit or apartment). Finally, you will not be eligible to 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, and 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
  • qualifying property tax payments were made either by you or the leasing company; and
  • you lawfully possessed the motor vehicle at the time 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 by you or the leasing company are eligible for the credit. You must refer to the January 1998 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 1998, contact your leasing company for the appropriate property tax information.


IF I PAID MY PROPERTY TAXES DURING 1998, MAY I CLAIM THE CREDIT ON MY 1997 CONNECTICUT INCOME TAX RETURN?

No. The credit is limited to qualifying property tax payments. (See What are Qualifying Property Tax Payments?)


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

If you and your spouse are both Connecticut residents and are filing a joint federal income tax return, you and your spouse are required to file a joint Connecticut income tax return. The credit on your joint Connecticut income tax return may not exceed $215. If you, 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 are eligible to claim the credit on your 1997 Connecticut income tax return as long as you, your spouse or both of you made qualifying property tax payments on such property.

If you and your spouse are both Connecticut residents and each of you files a separate federal income tax return, each of you is required to file a separate Connecticut income tax return. The credit on your separate Connecticut income tax return may not exceed $215 (and the credit on your spouseís separate Connecticut income tax return may not exceed $215). Qualifying property tax payments may only be made by you 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 1997. (Similarly, if your spouse does not own the 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 1997.) If you together with your spouse own your primary residence or if you together with your spouse are the owners of a privately owned motor vehicle (or the lessees of a privately owned motor vehicle), see the next question.


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

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 $215 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 $400 first due on July 1, 1997 from a Connecticut municipality on that vehicle. You paid $325 of that bill during 1997, and your sister paid $75 of that bill during 1997. 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 $325, your credit may not exceed $215. You may claim a credit of $215 or the amount of your Connecticut income tax liability as reported on your 1997 Form CT-1040, Line 10, or your 1997 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 $75 and may claim a credit of $75 or the amount of her Connecticut income tax liability as reported on her 1997 Form CT-1040, Line 10, or her 1997 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 and is eligible to claim the credit of up to $215 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 $500 first due on July 1, 1997 from a Connecticut municipality on that property. You paid $300 of that bill during 1997, and your cousin paid $100 of that bill during 1997 and $100 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 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 $300, only $250 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 one-half ($250) of the property tax bill ($500).) However, your credit may not exceed $215. You may claim as a credit the lesser of $215, or the amount of your Connecticut income tax liability as reported on your 1997 Form CT-1040, Line 10, or your 1997 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System. While your cousin made property tax payments of $200, only $100 of those payments were qualifying property tax payments because only $100 was paid by your cousin in 1997. Your cousin may claim as a credit the lesser of $100, or the amount of his Connecticut income tax liability as reported on his 1997 Form CT-1040, Line 10, or 1997 Form CT-1040EZ, Line 4, or the amount computed by the Connecticut Telefile System.)


IF I MADE QUALIFYING PROPERTY TAX PAYMENTS IN EXCESS OF MY CONNECTICUT INCOME TAX LIABILITY, AM I ENTITLED TO A REFUND OR TO CARRY FORWARD THE EXCESS TO MY 1998 CONNECTICUT INCOME TAX RETURN?

No. The maximum credit allowed is $215, and any excess may not be carried forward or refunded.


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

Yes, if your filing status for Connecticut income tax purposes is "Married filing joint" 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 separate" or "Head of household", you are limited to qualifying property tax payments made on one privately owned or leased motor vehicle.


MAY I CLAIM THE CREDIT IF I PAY THE 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 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?) Otherwise, those payments would not be qualifying property tax payments. Only the owner or lessee of the property is eligible to claim the credit.


ARE NONRESIDENTS OR PART-YEAR RESIDENTS ELIGIBLE TO CLAIM THE CREDIT?

No. Only resident individuals are eligible. Resident trusts or resident estates are also not eligible.


WHAT RECORDS SHOULD I RETAIN TO SUBSTANTIATE THE CREDIT THAT I CLAIMED?

A receipted bill 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) will be sufficient to support your claim for credit. Do not attach these records to your Connecticut income tax return. You should retain these records for at least three years from the due date (or, if you request an extension of time to file your return, 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), but 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 are eligible to claim the credit for property taxes that first became due on July 1, 1997, and that you paid during your taxable year beginning during 1997. Wherever this Informational Publication refers to "1997", substitute "your taxable year beginning during 1997".


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), but 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 are eligible to 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 on July 1, 1997.


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, question-and-answer format.


EFFECT ON OTHER DOCUMENTS: IP 96(9), Q & A: Property Tax Credit, is obsoleted for taxable years beginning on or after January 1, 1997.


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

  • 860-297-5962 (Hartford calling area or from out-of-state); or
  • 1-800-382-9463 (toll-free from within Connecticut)

Telecommunications Device for the Deaf (TDD/TT) users only, please call 860-297-4911 during business hours.


FORMS AND PUBLICATIONS:

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

  • Telephone: use the phone numbers listed above and select Option 3 from a touch-tone phone;
  • Internet: preview and download forms from the DRS Web site: http://www.ct.gov/drs.

IP 97(9)
Income tax
1997 Property tax credit
Issued: 1/8/98