Assessment and Revaluation
The assessment is the value of property to be used for local taxation, as determined by the Assessors and according to Massachusetts laws and regulations established by the Commissioner of Revenue.
How is my property valued?
Valuation is based on "Full and fair cash value," the amount a willing buyer would pay a willing seller on the open market. Assessors first inspect the property to record specific features of the land and buildings that contribute to its value. Size, type, quality of construction, number of bedrooms, baths, fireplaces, type of heating system are all examples of the data collected and listed on the individual property record cards.
Using these facts, the Assessors determine the value of property by choosing the assessing methodology that most accurately reflects the real estate marketplace. The three methods of appraisal are as follows:
1. Market Approach - This method compares your property to others that have sold recently. Before any sale can be used in this approach, it must be determined if they are "Arms Length," or good, open market sales. As there may be outside factors that go into a sale price, the assessors must analyze each sale carefully. Other important valuation considerations are location, size, condition, quality, and time of sale.
The market data approach gives the best evidence of market value when there is an active real estate market and sales are plentiful. It is best applied to residential properties and to vacant land in residential and commercial areas because these properties usually sell most frequently and these types are usually the easiest to compare. Commercial and industrial properties are more complex and therefore more difficult to compare.
2. Cost Approach - This approach is based on the cost of replacing your property new. It is how much money it would take, at current material and labor costs, to replace the property with one similar. The object of the Cost approach is not to estimate the actual cost of buying land and constructing a new building, but to estimate the market value of an existing property. If the property is not new, the assessors must also determine how much it has depreciated. In addition to the value of the improvements, the assessors must also separately establish the value of the land as if it were vacant.
3. Income Approach - The income approach to value is the process of converting anticipated net income into an estimate of value. The income approach is used to value property which is normally bought and sold on the basis of its income producing capabilities, for example: apartment buildings, office buildings, shopping centers, industrial buildings, etc.
The Assessors determine through a capitalization formula what a prudent investor would typically pay for your property. They consider factors such as operating expenses, taxes, insurance, maintenance costs and the return most people would expect on your kind of property.
The capitalization process converts anticipated future benefits in the form of income into a present value estimate. In order for the Assessors to support the value derived by the income approach, information on current market rentals is gathered from a variety of sources such as property owners, owners of other rental property (via an Income/Expense questionnaire), tenants, brokers, public records (leases, etc.).
What happens to the value if I improve or repair my property?
Generally, improvements that increase the market value of a property will increase the assessed value. Typical improvements include the addition of a room or garage, central air conditioning, fireplaces, in-ground pools, decks. Questions regarding a particular improvement should be directed to the Assessors.
Normal maintenance helps to retain your market value. General repairs will not affect the assessment.
"I did my own construction work to save money. Why did the assessed value go up as high as if I hire a contractor? Why doesn't the new value reflect the actual cost of the work?"
The assessment is based on "fair market value". Whether you did your own construction work or hired a contractor, the end value is the same. An additional improvement to the existing structure adds what is called "contributory value."
The value is not based on the cost to improve it, but on the value it contributes to the overall worth of the property.
THE ABATEMENT PROCESS
What is ABATEMENT?
An abatement is a reduction of property tax based upon a reduction in the assessed value of taxable property. A taxpayer must apply for an abatement for each fiscal year in which there is a dispute. An application cannot be filed on taxes from previous years.
When is an abatement granted?
REASONS FOR ABATEMENT:
1. Overvaluation - the assessed value is too high
2. Disproportionate Assessment (pertains to entire property classes, not an individual unit or development
3. Improper Classification - for instance, a property is classified as commercial land when it is actually residential land.
4. Statutory Exemption - the property is exempt from taxation based on use.
You are appealing your assessment, not your taxes.
Therefore, you must pay your taxes pending your appeal.
When can I file for an Abatement?
An application for abatement must be filed in writing on an approved abatement application form which must be filed within 30 days after the mailing of the first actual tax bill of the fiscal year (MGL 59:59). The deadline date is clearly indicated on the tax bill.
What is the process for filing for an abatement?
The Board of Assessors is authorized by law to request information that is necessary to confirm the property data. To preserve your right to appeal an abatement decision, you must provide all information requested by the Board of Assessors. Failure to respond to an information request within thirty (30) days of the request will result in a denial of the application and may bar an appeal to the Appellate Tax Board.
After you file your application, the Board of Assessors may contact you to arrange for a complete interior and exterior inspection of your property (unless the property has been recently inspected and there have been no changes). This inspection is an important part of the review process; If you refuse the inspection, the Board of Assessors will deny the application.
Commercial or Industrial property owners may also be required to provide additional Income and Expense Information. Failure to provide this information within thirty (30) days of the request will result in a denial of the application
The Board of Assessors has three months in which to act upon applications that have been filed on time. They will notify you of their decision through the following notices:
NOTICE OF APPROVAL...a reasonable abatement will be granted if the property was assessed in excess of its fair cash value, at more than its just proportion, or improperly classified. The Assessors' Department will abate the amount specified in the notice.
NOTICE OF DENIAL...No abatement will be granted. A denial will be issued in cases where the Assessors made a decision based on the merits of the abatement application, or failure of the applicant to file an Information Requisition.
NOTICE OF DEEMED DENIAL...An application may be denied for reasons of inaction in cases where the Board has not made a determination on an abatement application within three months
The deadline for filing abatement cannot be waived or extended for any reason. If the application is not filed by the due date, you lose all rights to abatement and the Assessors, by law, cannot grant you one.
What happens when the abatement application is approved?
You will receive a notice indicating the amount of the abatement and the adjusted property value. Your abatement will normally be credited toward your Spring tax bill.
Can I appeal elsewhere if the Assessors deny my abatement?
If the Assessors do not grant the desired abatement, the taxpayer has the right to appeal to the State's Appellate Tax Board (ATB) within three months of the date on which the Board of Assessors made its decision. You should call the ATB for an application. Your hearing, however, may not occur for a year or so.
Applications and information are available from:
Appellate Tax Board
100 Cambridge St.
Boston, MA 02114 (617) 727-3100
What does the Appellate Tax Board Do?
The Appellate Tax Board's function is to hear evidence as to whether or not the property, which has been petitioned for their consideration, is appraised at its fair value. The ATB cannot change your assessed value for any other reason, such as inability to pay.
How do I prove my case before the ATB?
In order to receive a reduction in the assessed value before the ATB, the property owner must prove that the market value of their property exceeds actual market value. A petitioner's presentation must be based upon hard facts and details, not generalities.
The ATB has no jurisdiction or control over taxes or tax rates.
What is a REVALUATION?
A revaluation is an update of all assessment of real and personal property in the city through sales analysis and data collection. The revaluation equalizes the values of all the properties for the purpose of a fair distribution of the tax burden.
Is a revaluation necessary?
All municipalities are required to conduct a triennial (every three years) revaluation of all real and personal property in accordance with MGL Chapter 40, § 56. The Massachusetts Department of Revenue (DOR) mandates the revaluation so that all properties are listed at current market value and contribute an equitable portion of the total tax burden.
What is the role of the Department of Revenue in the Revaluation Process?
The assessment roll as established by the Assessors is audited by the State Department of Revenue (DOR) with respect to whether the assessed values reflect values at the current market rates. The same roll is also audited to ensure that there is equity in the values established (i.e. like properties similarly valued). If the assessment roll is not approved (or certified) by the Department of Revenue, then the City cannot proceed in setting its tax rate.
What is Fair Market Value?
Fair Market Value is determined by the activity in the real estate market and general economy. The best indicator of fair market value is market activity. It is the price most people would pay for the property in its present condition.
The Assessors do what you would do to determine the value of your property. They research and analyze the recent sales in any particular area or neighborhood. Important factors are location, age condition, style, size, quality of construction, zoning, etc.
What period of time is used for the Revaluation?
The valuation of your property is based on an analysis of the market for the full calendar year prior to the revaluation project. The months preceding and following the full calendar year are also included in the analysis process. The revaluation for fiscal year 2010 (July 1, 2009 - June 30, 2010) will be based on the qualified sales of 2008.
Are the assessed values adjusted between Revaluation years?
The assessed values are reviewed each year based on sales.
Will the Assessors inspect the interior of all the houses?
The law requires that the property be valued from an actual viewing or from the best information available. It is not necessary to view the interior of every house, every year. Therefore, the Assessors (or their representatives) perform periodic interior inspections. They also attempt to review the interior of a house when a building permit has been granted, when the house is sold, or when an abatement application has been filed.
If we are unable to enter your property, we still review your assessment based on the existing records and sales of property similar to yours.
How do I know if my assessment is fair?
Compare your property to similar properties that sold in the previous year. Your assessed value should be in line with the sale prices.
Remember, very few properties are exactly the same. The values should be comparable but not necessarily the same.
What if I do not agree with my assessment?
If you feel that the assessed value is incorrect or you feel that you have evidence that the value exceeds the actual fair market value of your property, you have the formal right to appeal by means of the Abatement Process.
Are my taxes increased by a Revaluation or an Interim Year Adjustment?
A Revaluation or an Interim Year Adjustment may result in an increase or decrease in your assessment. And, that new assessment is applied to the tax rate.
Not all values will change at the same rate. Sales analysis will show that some neighborhoods and property types have increased or decreased in value while others may have remained the same. The purpose of the revaluation is to make sure that the assessed values reflect the changes that have occurred in the market.