Property tax, the basics

Property tax, the basics

For most of our clients in eastern Massachusetts, their property taxes went up for 2018. In many towns and cities, the tax rate stayed the same, or even went down.

Example: In Somerville, the tax rate for residential property went down slightly from Fiscal Year (FY) 2017 and FY2018. It was $11.67 per thousand dollars of value for FY2017 and is $11.31 per thousand dollars of value for FY2017.

The residential exemption (a 35% tax break for owner-occupied properties) stayed the same.

Why do your property taxes keep going up, when the tax rate has gone down and the same exemption are in place?

Because property taxes are calculated as the sum of your tax rate times the value of your property. Currently, property taxes are going up because property values are going up.

Most of the value of your property is the land. No matter how nice your house or condo might be, the land size and location has the biggest impact on your assessed value. If you own a property in an area where properties are selling for much more than they sold for last year, your property is considered more valuable than last year, whether you did anything to improve it or not. The location of the land makes it more valuable, since you could sell it for more now, if you chose to.

What’s an abatement, and should I file one?

An abatement is a request to lower your property tax, based on evidence that the assessed value of your property is incorrectly set too high.

Unless the assessors were way off the mark, I do not recommend you file an abatement.

What would be “way off”? If the assessment seems to be for a property that is not even remotely like yours.

  • You are assessed based on a 4-bedroom condo, when you have a 2-bedroom condo.
  • You are assessed for 8,000 square feet of land when your house is on 3,000 square feet of land.

What’s not “way off”? If there are errors on your assessment records.

  • They counted three full bathrooms when your house has two full bathrooms and a bathroom with a shower, but no tub.
  • They marked the condition of all the bathrooms as modern, when they are really semi-modern.
  • They think the property has a 2-car garage, but it has a 1-car garage with a storage area not big enough for another car.

If you have these kinds of errors, you can get the record corrected, but it is not going to have an impact on your assessed value.

How close are assessed values to sales values?

Assessed values tend to be lower than actual sales values when the market is going up. There is a time-lag because the process of assessment is slow and involves large numbers or property. When property values are increasing, it takes the municipality time to catch up.

I took a quick (and scientifically invalid) look at the properties sold in Somerville in the last quarter of 2017 to compare their assessed value to their recent sale price. The multiple listing service database showed 191 properties. I took the lowest, closest to average, and highest priced properties sold as single family house, condo, and two or three-family house for the last quarter of 2017. Then, I looked up the Fiscal Year 2018 assessed value for that property.

The lowest sale for a house was 58 Bradley Street, in Winter Hill for $483,000. FY2018 assessed value is $395,800.

The closest to average sale for a house was 54 Prescott Street, in Central Hill for $815,000. FY2018 assessed value is $781,500.

The highest sale for a house was 17 Browning Rd in Winter Hill for $1,368,000. FY2018 assessed value is $1,081,200.

 

The lowest sale for a condo was 58 Hinckley St U:4, in Winter Hill for $325,000. FY2018 assessed value is $240,600

The closest to average sale for a condo 13-A Maple Ave U:13A in Winter Hill for $736,000. FY2018 assessed value is $639,100.

The highest sale for a condo was 38 Chandler, unit B in Davis Square for $1,735,000. FY2018 assessed value is $1,431,500.

 

The lowest sale for a two or three-family house was 5 -7 Lowell Terrace in Winter Hill for $653,000. FY2018 assessed value is $517,000.

The closest to average sale for a two or three-family house 39 Irving Street in Davis Square for $1,100,000. FY2018 assessed value is $1,039,000.

The highest sale for a two or three-family house was 74 Morrison Avenue, Davis Square for $1,902,000. FY2018 assessed value is $1,151,900.

Attorney Richard Vetstein, as usual, knows where to get the details to us in an understandable way. If you are interested in how an assessor’s office works, he published this, a guest post from Jon Steinberg, Chief Assessor for the town of Westborough.

 

By |2018-01-08T17:43:23+00:00January 17th, 2018|Categories: Money and finance|

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