Property Tax Abatement

[This posting applies to MA residential property only.]

Tax abatement for residential property is one of those topics where there are a large number of misunderstandings - some owners think they are paying too much (but they aren't) others think they may be paying too less (but in fact they may be paying more than necessary).

The most important thing to remember is the assessment - "Total Real Estate Value" on the MA Real Estate Tax form - has absolutely no relation to the market price of the property. It is simply a number used to calculate your property tax.

It does reflect the amounts assigned to similar properties - so all properties in your town that are largely similar to yours, will (should) have similar "Total Real Estate Value" amounts.
This makes sense since the goal is to spread the tax fairly, and as long as similar houses are valued the same, applying the percentage property tax means everyone is taxed fairly.

But - this is where things can get out of sync. The Board of Assessors in the town Tax Collector's office only has the actual real estate sales figures to go by. And it is very difficult to figure out what other "similar houses" exist in the area. So the assessment is made on recent sales, corrected for any information the assessors may have regarding similar property.

This system has a tendency to inflate property taxes for recent purchasers of property. Their house values are higher than the other similar houses that were bought way in the past. There are other reasons too why these values can drift apart, for both recent and past purchasers. This is where the tax abatement process comes in. Property owners can file for tax abatement - and as long as they provide concrete data regarding relative values of comparable properties - it becomes easy for the Board of Assessors to update the value of your property.

From the back of the MA real estate tax form, section on Abatement Application: "... You may apply for an abatement if you believe your property is valued at more than its fair cash value, is not assessed fairly in comparison with other properties, ...."
The second phrase is more important - it is not enough for your taxed value to be higher than any recent market value (especially in a down market as it is in 2010-2011). It is whether it is valued fairly in comparison with other properties.

For those living in large condo complexes, especially if there are multiple units that are built from the same model, the process becomes much easier and it is very easy to check exact same properties and thus to prove a case for tax abatement.
Towns in MA have their tax bills online - you can look up any property and the assessed value of that property.

Compare similar condo values to your assigned value, correct for any improvements you or that other property has made, look at the way the values have increased for both the properties, apply any correction there if necessary, and you can arrive at the correct value for your property.
If this is 5% or more lower than you should proceed with the tax abatement process. Look into condo rules also - you may be surprised at what all is in there, and it might require notifying the Board of Trustees before filing for tax abatement.

Fill in the application, provide an additional sheet showing the comparable property analysis, and then just wait for the Board to make a decision. If you have your numbers all outlined, it becomes much easier for the Board to do its job. It still takes a long time - 6-9 months, but if your numbers are correct, you have a very good chance of getting a reduction in your tax.

Forms and other information: [ search for "Tax Abatement"] is a good starting point, which should take you pages like this: Abatement Form and this one about Abatement Tax Tip Facts.
Then, locate your town's web site, find the "Look Up Your Property Assessment" or similar page, and start your research for similar properties. (Note that there may be multiple pages with that title - some will allow search by bill-number only, but there are other pages that allow search by street address. Assessed values are public information, so everyone is entitled to see all assessments.) Collect the data, prepare your comparative analysis, and send in the form, as per the directions on the back of your real estate tax bill.
The time to send in a tax abatement form is usually Feb 1, using the bills received by Dec of the previous year.

[Disclaimer: there is no guarantee implied, or any tax advice provided in this posting. This is just something that I have successfully completed, and discovered misconceptions while going through many mailing lists, so am capturing it here. No legal advice is intended.]