While the Property Tax Rate Rises, Most Home Values Drop
With the new property tax bills in the mail, Tewksbury Chief Assessor Jay Kelley describes the complex process of property assessments and taxes.
Other than the end of December signaling the dawn of the New Year, it also means that another round of property taxes is just around the corner.
The January bill, typically sent the first day of the year, is one of four quarterly property tax invoices the town sends out, including bills in April, July, and October.
The process for determining the bill is a complex matter. The Assessor's Office, headed by Chief Assessor Jay Kelley and a small team of full-time employees, is charged with assessing nearly 10,000 properties per year.
According town website, "The Board of Assessors is responsible for administering Massachusetts property tax laws equitably by estimating the fair market value of all real and personal property in Tewksbury."
The method by which the office judges property values is based upon local homes sold within the previous fiscal year.
"We look at the sales in 2009, said Kelley. "There (were) a couple hundred sales, so now, for 200 properties, we have great physical descriptions, and we know what the market value is because we have the sale price."
The physical description of each property -- land use, zoning, amount of acres, adjustment for its location in town, square feet, and other distinct features of the building and land--is critical to determining the value of the property. The building's price per square foot is also dependent upon how it is used in the building.
"There's a living area, which has one value, and an attic would have a lower value per square foot," said Kelley.
The office then calculates an average price per square foot, a number further influenced by refinements like flooring, roofing, and other variables.
"We adjust those refinements and the dollar-per-square-foot cost so that the calculated assessed value matches the sale prices," said Kelley.
The office is able to derive a formula based upon the sale numbers, which it then applies to the remaining properties in town. The assessment process occurs annually, which means that a property's assessed value should accurately reflect the market conditions and recent changes (for better or worse) in the property.
A complete revaluation, overseen by the Department of Revenue, is done on a three-year cycle.
"The Department of Revenue requires that we visit and inspect every parcel every nine years," said Kelley. "That's a long time because buildings are changing all the time."
To combat this problem, the office is privy to planning board materials that detail significant changes to properties. The office also conducts site inspections cyclically because they would otherwise be unable to keep up with the 10,000 requisite inspections.
Because of the recent assessments, Tewksbury residents can expect to see an affect from the 2009 property sales on their property bills in January.
"The first two bills, July and October, are preliminary estimated bills, and they're pretty much based on the values from the previous year," said Kelley. "The last two bills are based on actual values."
According to Kelley, the Massachusetts' tax law limits the increase in the town's overall tax levy to 2.5 percent. This statute was enacted to regulate the amount that towns can raise taxes.
"The amount of money that the town can raise in real estate taxes next year depends almost exclusively upon what we can raise this year," he said. "Proposition 2 ½ breaks the connection overall between property values and property taxes."
Historically property values have trended toward gaining four percent in value annually. This has not held true, however, of the last few years.
Tewksbury's average home prices have fallen, much like the rest of the country, from a peak of $377,000 in 2007, to $309,000 in 2010.
According to the office's website, tax rates for fiscal year 2011 are as follows: "For residential property and open space: $13.46 per $1,000 of value. For commercial and industrial property: $21.29 per $1,000 of value."
This compares to a rate for residential properties of $12.55 per $1,000 of assessed value in fiscal year 2010.
To put it in perspective, rates have fluctuated from a high of $20.00 per $1,000 of assessed value in 1985, to a low of $9.72 in 1989.
An increase or decrease in an individual's property tax bill is determined by a combination of the increase or decrease in both the tax rate and the value of a property.
"How much is each one of those 10,000 parcels going to pay? And the answer is, it depends on the relative value of that parcel, relative to the total value of the town," said Kelley. "Your individual tax bill could go up more or less if you owned a parcel whose value increased more or less than the average value of the town."
If a taxpayer feels as though their property has been assessed at too high a value, he or she has the right to file an appeal.
To appeal an assessment, residents must file an abatement form within 30 days of receiving their Jan. 1 bill. The office will then act upon the abatements. If the resident is still unsatisfied with the decision by the Assessor's Office, they can file with the Appellate Tax Board, a state agency based in Boston.
The Assessor's Office has many materials available to the public to better understand the property assessment and property tax processes.
You can also find materials such as the physical descriptions of properties at http://www.tewksbury.net/Pages/TewksburyMA_Assessor/index.