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| Residential
Real Estate Taxes
Real estate taxes are assessed against residential real estate, whether single, multi-family homes or condominium units, by the city or town in which the property is situated. The tax collector's office in that city or town can provide the tax rate applicable to the real estate as well as the actual tax amount levied on a particular property. When a house or condominium is sold, the lawyer handling the transaction for the buyer or the mortgage lender will obtain from the tax collector's office a certificate known as a lien certificate or Certificate of Municipal Liens, which states the amount of real estate taxes assessed against the property and whether any delinquencies or outstanding amounts are owed for the current or prior tax periods. The lien certificate forms the basis of real estate tax adjustments between the buyer and the seller at the closing. Recording the Certificate of Municipal Liens at closing will protect the buyer should the tax collector determine that additional taxes not reflected on the lien certificate are due. Frequently, lien certificates will also state water and sewer amounts owed. Water and sewer charges, like real estate taxes, constitute a lien on the real estate which, if not paid, could lead to a tax foreclosure. Many cities and towns issue tax bills quarterly for the fiscal year. Some issue tax bills semi-annually. In all cases, the tax bills are for the fiscal, not the calendar year, which begins on July 1st and ends on June 30th. At the closing, taxes will be pro-rated between the buyer and the seller depending upon the point during the fiscal year when the closing occurs. Mortgage lenders will frequently require that funds be placed in a tax escrow account to be added to monthly so that enough funds will be in the account when the taxes are due. Condominium units are taxed by cities and towns in the same manner as single or multi-family homes and the prorations are the same. Real estate taxes for a condominium are not included in the common area charges paid by the condominium owners to the unit owners association. Taxpayers may apply for abatements of real estate taxes on the basis of disproportionate taxation or overvaluation of the property. Real estate taxes may be disproportionate if substantially similar properties are treated differently. Real estate taxes may reflect an overvaluation if the tax assessment reflects a higher value than the property is, in fact, worth. Abatement applications are filed with the city or town within strict time limits after a tax bill has been issued. The tax, except in very limited cases, must be paid as a condition to an application for tax abatement. Refusal of the assessors in the city or town to abate a tax upon application may be appealed by the taxpayer to the Appellate Tax Board of the Commonwealth of Massachusetts, again within strict time limits. Some cities and towns have tax breaks for owner occupied properties. Inquiring of the tax collector before you purchase a home can help you verify the tax amount and help you anticipate any increase in taxes once the closing occurs. New construction impacts real estate tax assessments depending upon whether the house was completed at the time the assessment occurred. If it was not completed, partial improvements may benefit from a lower value which may be carried forward to the next assessment date. January 1st of each year has been the traditional assessment date for the fiscal year beginning the following July 1st, although changes in legislation have allowed assessors to reassess new construction at other times during the year. Kenneth
B. Hoffman, Esq. |