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March 1, 2024

Proposal offering tax relief to first-time homebuyers moves out of committee

Contributed A home for sale.

A proposal to offer certain first-time homebuyers a property tax abatement is moving on to the state House of Representatives after the Planning and Development Committee voted in favor of the bill Friday morning.

What’s in the bill:

House Bill 5167, which was introduced by the Planning and Development Committee, would authorize municipalities to abate up to $500 per assessment year of property taxes for certain first-time homebuyers who obtain a loan from the Connecticut Housing Finance Authority. 

The abatement could be up to five assessment years, according to the bill. A similar bill last year passed out of the House, but failed in the Senate. 

What’s at stake:

Advocates for first-time homebuyer tax abatements have said it can be used as an incentive to keep residents in Connecticut and build up the state’s workforce and labor pool, something that has been eroded in recent years during and following the COVID-19 pandemic.

The bill is one of many proposals that advocates say will help address the state’s affordable housing shortage. 

Who’s for it:

State Rep. Joe Zullo (R-East Haven) said Friday that the proposal would help first-time homebuyers in an extremely competitive real estate market, and open the door to more people seeking to live in the state.

The Connecticut Business & Industry Association has repeatedly supported the proposal as a means of keeping people in Connecticut and making housing more affordable.

  • “One of the major issues Connecticut businesses are facing is the lack of affordable housing options in our state,” the CBIA said in written testimony. “Currently, our state has over 90,000 jobs open and to fill those jobs we need to keep workers in the state, and we need to attract out-of-state workers to move to Connecticut. To do that, we must have affordable housing options for workers across our state. We are proud to support this bill, which would help to move the needle on establishing more affordable housing options for Connecticut workers.”

Who’s against it:

The Connecticut Conference of Municipalities said adding more property tax abatements would “further increase our overreliance on an overly strained property tax system.” 

Property taxes are the primary revenue stream for the state’s 169 towns and cities. 

Instead, CCM suggested offering a $500 income tax credit for first-time homebuyers for five years rather than a property tax abatement.

The Connecticut Council of Small Towns (COST) also opposes this bill, even though it supported the measure in previous years. 

  • “Concerns were raised that a local option tax abatement will simply shift a greater burden to other homeowners and property owners,” said COST Executive Director Betsy Gara. “In addition, there are a number of bills this session that would create or expand property tax exemptions, which would further erode the municipal property tax base, undermining efforts to fund the delivery of critical services, including education, transportation, and public health and safety.”

What’s next:

The Planning and Zoning Committee has already held a public hearing and issued a joint favorable report for the proposal. Now it will move to the House floor for more discussion and a possible vote.

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