Property Tax Rates & Definitions

  1. Definitions
  2. Property Tax Factors
  3. Property Tax Rates

Real vs. Personal Property

Real Estate Property

There is a physical distinction to be made to determine whether property is real or personal. Real estate is the physical land and appurtenances including structures affixed thereto in addition to the interests, benefits and rights inherent in the ownership of physical real property known as the bundle of rights.

Personal Property

Personal property is generally those items not permanently affixed to real estate. Personal property is movable and can be removed without serious damage either to the real estate or to the item being removed. The 3 categories of taxable personal properties are:

  • Business and professional furnishings
  • Household furnishings, in property other than the principal residence
  • Personal property of public utilities

Revaluation

Assessors in every city and town are responsible for developing a revaluation program to completely analyze and revalue all property within its borders every 3 years. In the 2 interim years between reevaluations, the assessor will adjust values in response to significant changes in the real estate market. Revaluations are required under Massachusetts law and are regulated by the Massachusetts Department of Revenue's Bureau of Local Assessment. The rationale for revaluation and interim year adjustments is to always maintain property at fair market or fair cash value to ensure equity for all classes of property.

Fair Cash Value

Full and Fair Cash Value

The assessors are required to assess all property at its "full and fair cash value," a term which could also be described as "market value" or "fair market value." Massachusetts General Laws define full and fair cash value as the price an owner willing, but not under compulsion, to sell, ought to receive from one willing but not under compulsion, to buy.

Market Value

The definition of market value as noted by the International Association of Assessing Officers (IAAO) is as follows: "Market value is the most probable price expressed in terms of money that a property would bring if exposed for sale in the open market in an arm's length transaction between a willing seller and a willing buyer both of whom are knowledgeable concerning all the uses to which the property is adapted and for which it is capable of being used." An "arm's length transaction" would be a sale between 2 unrelated parties both seeking to maximize their position from the transaction.

Determining Market Value

To determine fair market value, actual sales are used. The sales considered are those which occurred 12 months prior to the January 1 assessment date and 6 months after the January 1 date, trended back to January 1.

All arms length sales are considered bearing in mind that all buyers and sellers are not knowledgeable and that the market is imperfect in that regard. For this reason, one individual sale is not used to determine "market value." In reviewing and researching 18 months of sales, the assessor is able to estimate the approximate price a willing buyer might pay for a property on January 1.