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Why Do Boston Property Taxes Go Up Even When Property Values Drop?

The Massachusetts Department of Revenue reported that property values for single-family homes across the state fell to an average of 8.1 percent each year between 2007 and the summer of 2010. Although most Boston homeowners would assume that lower property values would mean lower tax bills, The Boston Globe writes that property taxes might actually increase instead.

Revenue Department spokesperson Bob Bliss said “it’s always been this way,” explaining that, “even if values go down, taxes go up… It’s like saying that it’s extraordinary that the sun rises every day.”

But the MA state law known as Proposition 2 ½, which was approved by voters in 1980, helps limit the increase of taxes. Proposition 2 ½ caps annual tax revenues at 2.5 percent of the overall assessed value of properties within a district, according to current fair-market values. The law also permits municipalities raise their total taxes to no more than 2.5 percent each year.

Unfortunately, Proposition 2 ½ does not limit the percentage of how much a homeowner's tax bill may increase. Every community that filed a report for this past fiscal year had a jump in residential tax rates, based on the Revenue Department's records. The commercial rates in each area, except for Bellingham, also went up.

The agency reported that the average bills for homeowners generally increased in every community besides Northborough. Residential tax bills went up to an average of 4.5 percent this year, from $4,882 to almost $5,234, in residential areas where the average property assessment fell from $394,661 to $372,015.

A Boston real estate lawyer can further explain the impact of changing property values on taxes and the legal options that may help Boston homeowners save more money. For general information on property taxes, visit the Related Resources links below.

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