Connecticut Real Property Tax Exemptions: What Nonprofits and Property Owners Need to Know
By: Philip C. Pires and Jason A. Buchsbaum
If you own property in Connecticut and operate a nonprofit or charitable organization, understanding real property tax exemptions can save your organization thousands of dollars each year. However, these exemptions are not automatic. They require strict compliance with Connecticut law, including filing a Tax Exempt Application (Form M-3), also known as a “quadrennial” report.
What Is a Real Property Tax Exemption in Connecticut?
The Connecticut General Statutes, particularly Section 12-81, outline various property tax exemptions. Pursuant to Connecticut General Statutes § 12-81(7), certain properties are exempt from municipal property taxes if they are owned by organizations organized exclusively for charitable, educational, scientific, literary, historical, or religious purposes and used exclusively for those purposes. This exemption applies to both real property (land and buildings) and personal property used in furtherance of the organization’s mission. This article focuses on the requirements for the charitable tax exemption outlined in Section 12-81(7).
Who Qualifies for a Charitable Property Tax Exemption?
To qualify under Connecticut General Statutes § 12-81(7), an organization must meet two key requirements:
- Organizational Criteria
The entity must be organized exclusively for charitable purposes. Courts will review the organization’s certificate of incorporation and bylaws to ensure there are no non-charitable purposes listed. While a court will also look to the entity’s federal tax status and determine whether it is a 501(c)(3) organization, the analysis goes well beyond that to determine the purpose(s) of the organization. Exclusivity is critical, and mixed purposes can disqualify the entity from receiving a municipal property tax exemption.
- Use Criteria
The property must be used exclusively for the charitable purpose. While occasional or incidental non-charitable use may not defeat the exemption, any substantial non-charitable use could result in a partial exemption or a complete denial. For example, if part of the property is leased for commercial purposes unrelated to the mission, that portion may be taxable.
The Three-Part Analysis for “Charitable” Status
Connecticut courts apply a three-part test to determine if an organization is charitable:
- Exclusively Charitable Purpose: The organization must be organized only for charitable purposes, which must also be reflected in the organization’s governing documents.
- Not Entirely Self-Supporting: The entity should rely on some level of charitable contributions or volunteer support, not solely on fees or revenue.
- Relieves a Public Burden: The organization should provide services that reduce the obligations of the state or municipality.
The Quadrennial Filing Requirement: Don’t Miss the Deadline
Even if your organization qualifies, you must file a Tax Exempt Application (Form M-3)—commonly called the quadrennial report—with the local assessor every four years. Failure to file on time can result in losing your exemption, even if you otherwise qualify. This form is due on November 1 of the filing year. If your organization acquires new property between quadrennial filings, you must file a supplemental return under Connecticut General Statutes § 12-87.
Strict Construction and Appeals
Connecticut courts strictly construe tax exemption statutes against the property owner. Simply having Section 501(c)(3) status is not enough. If your application is denied, you have the right to appeal to the Board of Assessment Appeals and then to Connecticut Superior Court.
Why Compliance Matters
Failing to comply with these requirements can lead to significant tax liability. Municipalities are increasingly scrutinizing exemptions as budgets tighten. If you are unsure whether your organization qualifies or need help filing your quadrennial report, you should consult an experienced Connecticut property tax attorney.
Need Help with Your Property Tax Exemption?
Our law firm assists nonprofits and property owners across Connecticut with filing quadrennial exemption forms, reviewing and amending organizational documents for compliance, and challenging denials of tax exemptions through appeals. Please contact our experienced Connecticut real property tax appeal attorney today to protect your organization’s tax-exempt status.
Attorneys
Principal
Principal