Assessment Down, Taxes Up – Taxes 101

by Christopher O'Brien

Part 1, of a 3-part series.

By Roy Balkus

So, you got your new assessment from the Town of Wolcott for your house. Oh, look, the assessed value is down, great that means my taxes will go down!!!! Probably the only time you would be happy to think that your house was not worth as much as it used to be.

But wait, not so fast let’s look at the process of revaluation, the why and the how and how your house fits into the “grand list”. Then you will better understand the process and be in a better position to perhaps know whether they will go up or down. And perhaps become more involved in the town to help control the taxes.

The Why: Revaluation takes place to more fairly spread the property tax burden. Different types of property values change over time in relationship to one another, even within a town like Wolcott. Commercial property values may be increasing while residential property values are stable. Condominiums may be declining in value while single family residences are increasing. One neighborhood may see declining values because of a new development that adversely affects the traffic patterns and thus makes that area less desirable. A new subdivision may be increasing in value because it convenient to the highway to make it easier to get to work. You may have made improvements to your property that increase the value.

To make the property tax fair the relevant State of Connecticut statute says that “revaluations must be conducted every five years. At least one revaluation every 10 years must be conducted by physical inspection; the other may be conducted by statistical means.” The most recent revaluation in Wolcott was a physical one. The revaluation is out sourced to a professional firm, with the expertise to value all 5500 housing units.

Why does anyone care when it was last done? In one extreme case that occurred in the not too distant past, in a city very close by, revaluations were delayed for decades. Houses that were selling for 40 thousand or 45 thousand dollars were being assessed at 10 thousand because the revaluation had been delayed for decades. While the mil rate certainly crept up, the real politically motivated reason for not doing a revaluation was that the city would have had to realize that factories which were declining in value due to the loss of industry were worth far less than they were assessed for. This would have shifted the tax burden to the home owners and other residential property owners.

Those people vote. Even if the factory owner lives in the city he only had one vote while residential owners represented thousands of votes. There were state statutes requiring revaluation in place but they were routinely bypassed by a request to the state legislature for an exemption. That presumably is not the case. Another inequity that this created is that some people were paying more in taxes for a brand-new car than they were for their house.

The “Notice of Assessment Change” that you recently received gives you the “old assessment” as of October 1 2011 and the new assessment based on the October 1 2016 value. The assessment is based on 70% of the fair market value. If you divide the assessment by .70 you will get what they believe the fair market value of your house is as of October 1, 2016.

Why 70%? While the 70 percent is a Connecticut standard for real estate assessments it is by no means sacrosanct. Other states tax on 100% of value. So, (my opinion) that should someone complain about their real estate taxes, part of the response can be “but we are only taxing you on 70 percent of the value”. Cars and other personal property are taxed at 100% of value so why should real estate be any different. Cars are given their values using one of the books for estimating value. No consideration is given for condition of the car whether it is damaged or in perfect shape. Once you completely understand how the mill rate and thus your taxes are determined you will see that the fact they are only taxing you on 70% of the value is bogus.

All the values represented by the assessed values of houses, commercial property, industrial property, personal property, and cars in each town are added together. This becomes the “grand list” for that town. The grand list is “fixed” as of October 1st of each year. The new assessment you recently received represents the value, and thus your contribution to the grand list as of October 1, 2016. The grand list figure will be used in determining the mill rate and thus the taxes you will pay in July 2017 and January 2018. Fiscal Year 2017-2018.

How is the amount I will pay determined? How is the mill rate set and thus my taxes determined? See the second part of this series, coming soon.


Correction: The paragraph on valuation has been corrected from its first version: 

If you divide the assessment by .70 you will get what they believe the fair market value of your house is as of October 1, 2016.

The sentence was written correctly by the author upon submission, but incorrectly changed by the Editor of the Wolcott Whisper. The Editor regrets the error.

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