A bit about Real Estate Taxes
A client asked me this week to find a “home just like this one with lower real estate taxes” which led me to a larger conversation about real estate or property taxes.
Property Taxes or Real Estate Taxes
Calculated by taking a properties assessed value * tax rate / 1000.
For example: The 2020 residential tax rate in Braintree is $9.86. So if a home is assessed at $500,000, their 2020 real estate taxes are $4,930 (500,000 * 9.86 / 1000).
Assessed Value
The town tax assessor determines the market value of a home based on public record facts. For residential properties, the tax assessor usually uses the past year real estate sales to determine a homes likely market value.
How frequently a tax assessor’s office updates a property’s assessment can vary and may not reflect the real estate market value of your home at any time.
How is Tax Rate determined?
Oversimplifying quite a bit: In Massachusetts each city or town sets the tax rate annually based on that municipality’s total budget all the town services divided by the sum of the assessed value of all taxable properties. Many towns set different rates for residential, commercial and industrial parcels.
Residential tax rates in Massachusetts tend to be highest in towns with good municipal services but have very little non-residential income to offset it. Other towns are able to keep total taxes lower because a lot of town income comes from other sources or business and industrial taxes. Also some towns have voted to raise taxes to fund specific infrastructure projects or schools to improve the town services.
These rates vary greatly from town to town. So if you are looking for a home across many different towns, you might need to do more research by each town to figure out what residents receive for the town taxes paid.
Which homes have lower property taxes?
Luckily all of the real estate tax data is public and easily accessible online. Each towns website will list the tax rate and also you can look up tax assessment for every property in town. Also for convenience, I’ve provided the tax rate info for every town in Massachusetts.
As part of entering a property into MLS the real estate agent has to include the most recent tax assessment and amount - so you can see that information for all MLS listings.
Want more info?
Your real estate agent should be able to provide more details.
If you are a self-researcher, definitely spend some time on each municipal website and also you can see how close tax assessments are to real estate sales prices using Raveis News. From this page, select a Town and then choose Recent Sales which will show you homes sold for the last 3 months with list price, sales price and the latest tax assessment.
Or reach out to me, I am happy to point to resources to help you with find the data on real estate taxes, assessments and where to see what services you receive for those taxes.
