Friday, November 20, 2009

City Tax Outlook: Values Down, Rate Going Up

Property valuations in Boston are going down, so the tax rate has to increase. That was the message sent out this week to property owners by the Boston Assessing Department.

If the preliminary assessments are approved by the state, they would take effect in January of next year, but they reflect the values of January 1, 2009. Almost a year ago, the new tax bills reflected the values of January 2008, when a housing slump was still offset by a more prolonged increase in values for commercial property. This time around, there's a downturn for both types of property, and it's expected a larger portion of the higher tax levy will fall on homeowners.

The president of the Boston Municipal Research Bureau, Samuel Tyler, expects “a little shift from business to residential.”

“For the average single-family home,” he said, “the tax bill might increase by $100, $125 or $150 a year.”

Boston Assessing Commissioner Ronald Rakow says it’s “still too early to tell” how the tax levy will be distributed. But the notices from the city say the levy will increase by the maximum allowed, 2½ percent.

As Rakow notes, values are generally down this time for commercial and residential property. Housing sales figures from the Warren Group have shown some parts of Boston with large decreases in value and others with little change. So, as the notices point out, “homeowners may see an increase in their tax bill despite the reduction in their assessments.”

Unlike some other communities, Boston has a tax break for residential property with owner-occupants. The city also has tax relief programs for the elderly and other owners, including some veterans, and people with disabilities.

Commercial assessments are determined more by a property’s income from rents, or the loss of income with vacancies. The CEO of the Greater Boston Real Estate Board, Gregory Vasil, says that’s why the best way to relieve the tax burden on homeowners is to create more jobs.

“Vacancies are a function of job creation,” said Vasil. “And, if nobody creates jobs, nobody comes into the buildings.”