RE18RC07: Property Assessments, Valuation and Taxation

A Description of Assessment, Value and Taxes

I. Property Taxes

A. Board of assessors

1. Determines the value of all taxable land

2. Methods of assessing value

3. Frequency of assessing value

4. Assessors do not create value, but discover value

B. Budget ÷ city/town total assessed value = tax rate (per $1,000 of assessed value)

C. MA Law - assessed valuation is at "full and fair cash value" (market value)

D. Personal property assessments

1. Business and professional furnishings

2. Household furnishings, in property other than the principal residence

3. Personal property of public utilities

E. Personal property exemptions

1. Personal property subject to another local tax, e.g., vehicles, boats

2. Intangible personal property, e.g., stocks, bonds, cash

3. Professional tools

II. Real Property Taxes

A. Ad valorem taxes

B. The major source of local municipal revenues

C. Statement of delinquency on tax bills (beginning 2008)

III. Assessments and Valuation

A. Property tax rates (per $1,000 of assessed value)

(Suggest instructor provide analysis of both local and other neighboring cities/towns comparing tax rates)

B. Assessment values or full cash value of all taxable property in the town

Assessments by law in Massachusetts are 100% of full and fair cash value more commonly referenced as market value.

(Suggest instructor provide analysis of both local and other neighboring cities/towns comparing taxable property versus exempt property)

C. Assessment dates and fiscal years

1. Preliminary tax bills

D. Evasion of taxation

E. Exemption and abatements

1. Must file for abatement within 30 days of final tax bill (not estimated bill)

2. The abatement process

3. Appeal to appellate tax board or county commissioners

F. How values are determined

G. Classification - residential, commercial, industrial and open-space - M.G.L. c. 59, § 38

(may be taxed at different rates - at community option)

H. Proposition 2 ½ implications

I. Approaches to value: sales comparison, cost and income capitalization

J. Relationship between changes in value and tax rates

IV. Taxation Issues

A. Impact on assessed value from actual sales

B. Impact of growth

C. Municipal lien certificate

D. Statutory late interest - 14%

E. Failure to pay

1. Tax deed

2. Right of redemption


A. Government - local, county, state and federal

B. Residential exemptions

C. Religious organizations

D. Hospitals

E. Educational institutions

F. Senior tax relief

VI. Proposition 2 ½ - (initiative petition adopted by MA voters in 1980) - M.G.L. c. 59, § 21C

A. The principal features of Proposition 2 ½ are related to the total amount of property taxes which a city or town can raise each year. It contains two limitations on the amount of property taxes to be raised:

1. The property tax levy ceiling (the amount raised) can never exceed 2 ½ % of the full cash value of all taxable property in the city or town. A tax rate cannot be higher than $25 per $1,000 of valuation.

2. The property tax levy limit cannot be increased more than the 2 ½ % over the prior years levy limit unless it gets voters' approval to override the cap.
(Important note: Levy limit provisions of Proposition 2 ½ affect the total amount of taxes to be raised by a city or town and do not apply to individual tax bills.)

B. Whether the tax rate for a community will increase or decrease from the prior year will depend upon the levy decided upon by the community. It also depends on whether property values appreciate, depreciate or remain steady in the particular community.

C. Overrides

1. Overrides/Exclusions - A community may permanently or temporarily increase its levy limit by approving an override proposal in a town wide referendum.

a. General override - A permanent increase to town's levy limit

b. Debt and capital exclusions - temporary increases in a communities levy limit for the life of the project or debt service.

2. Only debt or capital exclusion can cause the tax levy to exceed the levy ceiling.

3. Underrides (a little known option)