When Property Tax rates Plunge But You Pay More
Table of Contents
Introduction
Most of us have felt the inflationary effects of higher gas and food prices. And now, as homeowners, it’s time to brace for yet another expense: higher property taxes. That’s right! Despite many Massachusetts towns reporting lower property tax rates in 2023 compared to 2022, property taxes are actually going up. So, what gives?
How Property Taxes are Calculated?
In Massachusetts, the town or city you live in determines how much each homeowner will pay in annual property tax. The amount of course is subject to a law called Proposition 2 1/2. Indeed, the formula for calculating property taxes is simply the town’s tax rate (expressed in dollars per $1,000 of assessed value) times the home’s assessed value. For example, if the assessed value of your home is $200,000 and your tax rate is 10, your total annual tax would be $2,000.
How Home Values are Assessed in Massachusetts?
The assessed or market value of your home reflects 100% of the full and fair cash value. In other words, it represents the amount a homebuyer will pay a seller on the open market. In recent years, property values in the Greater Boston region have skyrocketed, primarily due to inflation and a shortage of homes for sale. Consequently, homeowners are now paying more in property taxes. This is happening, despite a decrease in town property tax rates.
Tax Rates and Tax Bills (MetroWest Towns; 5-Years)
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Concluding Remarks
In conclusion, each town or city needs to collect a certain amount of tax dollars to meet its annual budget. Towns can either raise the property tax rate, assessed value or both. So, don’t be fooled by a decrease in the town’s tax rate. Focus on the bottom line which is the tax bill – the total amount of tax you’re required to pay.
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Team Coyle, licensed real estate agents at Compass, has been successfully helping clients buy and sell real estate in the Greater Boston region since 2015.
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