Boston's Residential Exemption and the Two Tax Rates

Most of the property tax questions I get in September come from people who closed in the spring and are looking at a bill that seems too high. Usually the answer is the residential exemption, and it isn’t on the bill yet. Here’s how Boston’s side of it works, straight off the city’s own pages.

What the exemption does

The residential exemption reduces your tax bill by excluding a portion of your residential property’s value from taxation. The city knocks a chunk of your home’s value off before it applies the rate. The city says it saved qualified Boston homeowners up to $4,353.74 on their tax bill last fiscal year. The credit is applied to the third quarter bill, the one issued in late December.

Who can claim it, including the part that just changed

You have to own the property and occupy it as your principal residence, and you can only qualify for a residential exemption on one property. A recent home rule petition expanded the program. In the city’s words, homeowners who obtain their homes before July 1 may now qualify for the current fiscal year. For the current fiscal year that means owners who recorded a deed at the Suffolk County Registry of Deeds and occupy the property as their principal residence in the first half of this calendar year may be eligible. The expansion doesn’t change anything for people who already owned and occupied the home on the assessment date. They still qualify.

The two rates on a Boston bill

Boston operates under a property tax classification system, which lets the city charge different rates for residential and commercial property. Last fiscal year the residential rate was $12.40 and the rate on commercial, industrial and personal property was $26.96, both stated per thousand dollars of value. The city defines the rate plainly: the amount a taxpayer owes for each one thousand dollars of property value in a given year.

The first two bills are estimates

The fiscal year starts on July 1 and ends on June 30, and taxes are billed quarterly. The first quarter preliminary bill goes out on July 1 and is due August 1, or the first business day after. The second quarter preliminary bill goes out October 1 and is due November 1. Both are estimates based on the prior year’s property value and tax rate, two equal amounts. The third quarter bill, issued in late December, is the first one that reflects the actual value and the fiscal year’s rate, and it’s where any exemption credit normally appears. Third quarter is due February 1, fourth quarter May 1.

Dates worth writing down

September is when the city mails residential exemption applications to new owners who purchased in the previous calendar year. January 1 is the assessment date for the following fiscal year and the day the abatement filing period opens, and it closes February 1. April 1 covers the residential exemption, personal exemptions and tax deferral, and it’s also when the fourth quarter bill goes out. The Assessing Calendar words that deadline as April 1, or three months after the third quarter bills are mailed if that’s later. Applications can be downloaded through the city’s Boston Property Lookup tool once third quarter bills go out in December, and before then forms are available at the Assessing Department and at the Taxpayer Referral and Assistance Center in City Hall. The city recommends filing by mid October to get the credit onto that December bill.

After you file

An application in the mail doesn’t put the credit on your bill. The Taxpayer Referral and Assistance Center has three months from the date you filed to decide, and filing does not let you postpone paying. Keep paying each quarter while it’s under review. If the application is approved later in the year, the Collector Treasurer credits you then instead of on the December bill. And exemptions don’t stack without limit: if you claim others alongside the residential exemption, the taxable value of your property can’t be below 10 percent of the assessed value, with exceptions for certain residents with physical ailments or financial hardships.

If you closed on a Boston home this year and you’re not sure whether the exemption is on your bill, send me the address and I’ll tell you what I see and what to file. Diana Kim, REALTOR®, eXp Realty.