Assessed Value V.S Fair Market Value
Over the last few years in Massachusetts as well as many other parts of the country we have seen a rapid decline in Real Estate values. In many towns around Metrowest Massachusetts, it would not be unusual to see a home that sold in 2007 for $500,000 to be re-sold today around $450,000. It is an unfortunate fact of life. All good things tend to come to an end at some point.
One of the standard lines of thinking that occurs when Real Estate values are heading downward is that the homeowners tax bill must also be coming down too. Part of this misconception happens because people assume that the fair market value and assessed value are the same.
In theory, this should be the case, but assessed values are nothing more than a yardstick for a municipality to collect an appropriate amount of taxes to sufficiently cover the state and local appropriations chargeable to the city and town.
Let's go over a few facts about your homes assessed value and the role of the towns assessor:
1.) In Massachusetts assessed, costs are based on 100% of full market value.
2.) Town Assessors are required to submit assessed values to the state Department of Revenue for certification every three years.
3.) The assessors review sales data and the Real Estate market every year and thereby reassess values each year.
4.) Assessors do not raise or lower taxes.
5.) Assessors do not make the tax laws which affect property owners.
6.) The Assessor's Office has nothing to do with the total amount of taxes collected.
7.) The assessor's primary responsibility is to find the full and fair market value of the property so that the taxpayer pays only their fair share of taxes.
As we head toward January, there is no doubt that you will see the assessed value of many homes coming down across Massachusetts. What you are also very likely to see is an increase in the fiscal tax rate to cover the difference in the lower assessed values.
As previously mentioned above, the numbers used are all just part of the game of collecting the proper amount of revenue to run the town.
So what are you supposed to do if you think you are not being appropriately taxed in relation to other similar homes that have sold?
You should go to your local tax assessors office and file for an abatement. All the information necessary regarding the application process and the deadlines for filing should be available.
Applications for abatements are due on or before the due date for payment of the first actual bill. The assessor has up to three months in Massachusetts to act upon your abatement request.
What happens if you do not feel that the assessor made the proper ruling on your abatement request? If this occurs, you have the right to appeal to the State Appellate Tax Board.
In Massachusetts, there are some who are exempt from all or part of their property tax obligations. Exemptions are available to those individuals that meet the various requirements in the following categories:
- Disabled Veteran
- Widows and/or Widowers
- Minor Children with a Deceased Parent
- Minor Children of Deceased Police or Firefighters killed in the line of duty
Applications for tax exemptions can also be obtained from your local tax assessor's office.
In Massachusetts, senior citizens have also been able to claim a refundable credit on their income taxes for property taxes paid on residential property owned or rented. This law is known as the Senior "Circuit Breaker" Tax Credit, it is equal to the amount by which their property tax payments in the current tax year (excluding any exemptions and/or abatement's), including water and debt sewer charges, exceed 10% of their total income for the same year.
To claim the credit, eligible taxpayers must submit a completed state Schedule CB, Circuit Breaker Credit, with their state income return. The form is available on the web at Circuit Breaker Credit.
As a Realtor who has covered local Metrowest Massachusetts Real Estate for the past thirty-one years, I often come across some really silly marketing by other Real Estate agents in regards to a homes assessed value. Things written in the Multiple Listing Service (MLS) like "What a bargain this home is priced X dollars below assessment." Most of the time the Realtor is making a very poor correlation between the assessed and market value.
When I see something like this, my immediate thought is that the homeowner has been paying too much taxes on their home or the assessment has not been adjusted yet.
In just as many circumstances I have seen a home with a lower assessment and a buyer's Realtor try to argue that the house is overpriced because of a low assessment.
The take-home message is that if you are considering buying a home, you should not rely on assessed value as a good measuring stick of market value. There are plenty of homes that are over and under assessed in Metrowest Mass. Hiring an excellent buyer's agent that can point out a homes true market value is always a wise move!
Thinking of selling a home, condo or other Real Estate in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale, Hopkinton, Medway, Mendon, Milford, Southboro, Westboro, Northboro, Shrewsbury, Northbridge, Bellingham, Whitinsville, Upton, and Uxbridge? Get in touch I would love to interview for the chance to represent your best interests.
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