4 Common Myths of Massachusetts Real Estate Taxes
No Massachusetts property owner- residential or commercial- is unfamiliar with the existence of real estate taxes; however, there are a variety of myths that often circulate about the details of these taxes, meaning owners are often misled when it comes to crucial information concerning their tax rates and properties. To help, below are four of the most common myths perpetuated about real estate taxes in Massachusetts to separate the facts from the fiction.
1) Residential and Commercial Properties Have the Same Tax Rates
Residential and commercial properties vary in a range of areas, and taxes are definitely one of them. The most obvious difference, first of all, lies in their definitions. Residential property covers any land that is used for living purposes, such as single-family homes. Alternatively, commercial property applies to real estate that has been acquired for business purposes and generating revenue. Apartment buildings, manufacturing sites, and even farms are filed under this classification.
Though both of these properties are subject to taxation, the rates that are applied to them differ. Commercial properties tend to be taxed at far higher rates than residential ones, the reasons for this ranging from political agendas to the perceived fairness of income-producing properties being liable for a larger tax burden. Whatever the reason, there is a distinct and undeniable difference in the amount of tax that commercial and residential owners are expected to pay.
2) Property Taxes Don’t Change after Preliminary or Final Tax Bills are Distributed
Whether it’s your preliminary tax bill delivering an estimated amount, or the final bill that displays your total tax amount for that year, property taxes are subject to change for any number of reasons. Due to property taxes being partially based on the assessed value of your property, any factors that may change this value can affect how much you are expected to pay.
Broader economic factors, or even structural changes to your specific property, can affect the amount you are paying in property taxes. On top of this, increasing or decreasing millage rates also have the potential to alter your property tax. These rates affect a property’s tax-assessed value, and are determined by the needs of your particular municipality.
3) Real Estate Taxes are the Biggest Source of Revenue for Massachusetts
Across the entire United States, property taxes tend to be a prominent source of tax revenue. However, when states are considered individually, it has frequently been found that Massachusetts does not rank among the top states that heavily rely on property taxes. Instead, it was states such as New Hampshire, New Jersey, and Vermont.
Rather than depend on property taxes, Massachusetts places a lot more trust in personal income taxes. These taxes are levied from various kinds of income, and differ greatly from property taxes as they do not take an owner’s property value into account. As far as Massachusetts is concerned, the taxes derived from personal income taxes generate the most tax revenue – not property taxes.
4) Real Estate Taxes in Massachusetts are the Highest in the US.
The property tax rates in Massachusetts are commonly referred to as being some of the highest in the US, despite there being little evidence to support this – in fact, there has been much research to contradict this popular belief! Studies have found that the Commonwealth of Massachusetts does not even feature among the top 10 states for property tax rates, and has been far surpassed by the likes of Illinois and New Jersey. The rumor of Massachusetts’ abnormally high rates has been widely perpetuated, yet holds no real value when considered alongside the facts.