Connecticut Superior Court Upholds Charitable Property Tax Exemptions for Nonprofit Residential Care Facilities

The Connecticut Superior Court recently issued an important decision addressing charitable property tax exemptions for nonprofit organizations operating residential housing for individuals with disabilities and mental health conditions. The case provides significant guidance regarding General Statutes § 12-81(7) and nonprofit tax exemption eligibility in Connecticut.the Superior Court ruled in favor of The Caring Community of Connecticut, Inc., holding that several residential properties operated for individuals with severe mental health disorders and intellectual disabilities qualified for charitable tax exemptions under General Statutes § 12-81(7).The Town of Colchester argued that the organization was not entitled to an exemption because its operations were largely funded through state service contracts, making the organization effectively “self-supporting” rather than charitable. The Town also contended that the organization failed to satisfy its duty to cooperate with the assessor because it did not file annual M-4 exemption forms for certain grand list years.The court rejected both arguments. Relying on Public Act 22-73, which amended § 12-81(7), the court held that housing operated for persons with mental health disorders and intellectual disabilities “shall be deemed to be an exclusively charitable purpose” under Connecticut law. The court concluded that the statute does not disqualify organizations simply because they receive substantial government funding.The court further held that § 12-81(7) requires only quadrennial exemption filings, rather than annual M-4 filings, and found that the plaintiff had adequately cooperated with the assessor by providing sufficient information regarding the use and operation of the properties.As a result, the court ordered that the properties receive charitable tax exemptions for the grand list years in question, directed the Town to reimburse taxes paid, and awarded attorney’s fees and costs to the plaintiff pursuant to § 12-119.This decision provides important guidance regarding Connecticut charitable property tax exemptions, particularly for nonprofit organizations providing residential services to vulnerable populations. The ruling clarifies that substantial state funding does not automatically defeat charitable status under § 12-81(7), and that municipalities may not impose exemption filing requirements beyond those expressly contained in the statute.

For information regarding property tax matters, please contact C. Scott Schwefel at (860) 606-1712 or scott@shipmanlawct.com