A significant legislative change is on the horizon for Connecticut residents that owe back property taxes. House Bill 5144, currently advancing to the House floor, proposes to reduce the interest rate on delinquent property taxes once they are sold to third-party entities. The bill aims to lower the interest rate from the longstanding 18% to a more manageable 12% for residents dealing with outstanding property taxes, provided their liens are purchased by a third party. However, municipalities will still be able to impose an 18% interest rate on unpaid taxes that have not been assigned to outside companies.
This adjustment is designed to alleviate the financial burden on residents striving to clear their tax arrears while ensuring municipalities can still assign liens to collect the full amount due. Representative Tom Delnicki emphasized that the reduction in the interest rate would offer a fair return to third-party purchasers and provide some relief to taxpayers.
The bill also includes provisions to regulate attorney fees, preventing them from being charged until foreclosure proceedings commence, addressing concerns over potential abuse in the accrual of legal costs by third parties. Despite its passage through the Planning and Development Committee, the bill faces opposition, particularly from the Connecticut Council of Small Towns and various municipal tax collectors, who argue that it might compromise the ability of towns to collect overdue taxes effectively.
For businesses and property owners, understanding the potential impact of these changes is crucial, as it could affect financial planning and tax liabilities significantly. We can help you navigate these changes, ensuring compliance and optimizing tax management strategies.