If you’ve owned your own home prior to buying a new one, then you likely already know what to expect when it comes to property taxes (though if you’re moving from another state or city, it’s worth looking into how your taxes will be affected before buying). However, for those transitioning from renting to owning, it’s important to study up on the tax system first, as it will help you to avoid any nasty surprises down the road.
Here are a few of the most essential things you should know about paying property taxes, with a particular emphasis on Boston and Massachusetts.
1. In Massachusetts, property tax rates vary by city or town.
This is fairly straightforward, but it’s also essential knowledge for homeowners. Each city or town in Massachusetts sets its own property tax rates, which means that while a lucky few may pay under a thousand dollars in taxes each year, others pay thousands every quarter (remember that property taxes are paid quarterly). It also means, of course, that you shouldn’t expect tax rates in the suburbs to be the same as in the city proper.
Also, note that the city of Boston offers money-saving residential exemptions to homeowners who occupy their own home as their principal residence.
2. Property taxes are assessed each year.
Each year in January, cities and towns across Massachusetts adjust their property tax rates, which must then be approved by the state. Some go up, but in 2015, many communities will actually see their tax rates decline. Either way, it’s important for homeowners to be aware that tax rates change annually so that they can budget accordingly.
3. Taxes may go up annually, but only by a set amount.
Many communities throughout Boston raised property tax rates this year. Technically, Prop 2 ½, passed in the 1980s, prohibits communities from raising their taxes by more than 2.5% each year. In reality, many towns and cities are able to circumvent this law by implementing tax overrides, designed for times of financial need. It’s important to be aware of this, particularly if you’re considering buying a home in an area that has seen significant property tax increases in recent years.
4. If you feel you’ve been taxed too highly, you have options.
Some new homeowners make the mistake of assuming their taxes will reflect the exact amount they paid for their new home. However, your actual taxes owed will be determined by your assessor, who takes into account several important factors, including the value of other homes in your area and any additions or renovations that have been made.
However, if you feel your home has not been properly valued, you do have options. You may contest the valuation through your local assessor’s office, and some homeowners may qualify for exemptions that will lessen the burden of paying property taxes.
For answers to your home buying questions and more, contact Phil Ganz at Fairway Mortgage Corporation today!