Welcome to the second issue of Appraisal Insights! We’ve launched this newsletter to share customer stories and illustrate the power of real estate appraisals to provide valuable property and market insights.
Recent appraisals that we’ve written include:
- A repurposed old mill building in Easthampton that now houses a brewery and other tenants
- A vacant Friendly’s in East Windsor, CT
- A half acre of land in Worcester that was once part of a condo complex
- An industrial parcel in Agawam improved with a single family
- A mixed use building in Holyoke
- A manufacturing building in Chicopee
This is the site of what could become the new Polar Park in Worcester’s Kelley Square, where the PawSox plan to relocate and become the WooSox. The underdeveloped neighborhood is industrial in nature and part of the Canal District, even though there is no canal. The six acre ballpark would open for the 2021 season. It would serve as the centerpiece of what is planned to be an 18-acre, 650,000 square foot mixed use development. While nearby bar and restaurant owners are celebrating, a few surrounding property owners haven’t come to terms with the developer yet. They anticipate if they don’t come to terms, their properties will be taken by eminent domain. Downtown Worcester is across train tracks in the background.
Taking on the Taxman:
The Perils of Filing for an Abatement
By Jim Daly
Experienced property owners tend to have an idea of what their property is worth. So when they receive an assessment that overinflates the assessed value of their property ~ thus substantially increasing property taxes ~ they know their only option is to file for an abatement. One commercial client of mine who recently filed for an abatement said she was “suing the town.” The phrase struck me as odd at first but was completely accurate. Filing for an abatement is a contentious act.
A tax assessment is the job of determining a property’s value to calculate property tax. In Massachusetts, an annual tax on a property is equal to the assessment divided by $1,000, which is then multiplied by a set tax rate. A townhouse I once owned in Boston is currently assessed at $685,000. The 2018 residential tax rate for the city is $10.48. The annual taxes are calculated by dividing $685,000 by $1,000 ($685), then multiplying by $10.48, which equals $7,178.80. In some communities ~ Boston is one ~ homeowners can file for a residential exemption, granted if the owner lives at the property. This can result in a substantial tax reduction.
An abatement is a reduction of or exemption from taxes granted by a government for a specified period. If an assessor grants an abatement, the department decreases the assessed amount by a certain number, which then lowers the property tax. Abatements typically are only good for a 12 month period.
The due date for filing for an abatement in Massachusetts is February 1, the day that 3rd quarter taxes are due. Cities and towns are strict about the due date requirement. Also, quarterly taxes must have been paid regularly for an abatement filing to proceed.
The wisest property owners file for an abatement only if the assessment is glaringly inaccurate. It takes time and money to file. Magistrates who hold court proceedings will only consider an appraisal report, or sometimes just an appraiser’s live testimony, as evidence to dispute the assessment. So a property owner must first decide if appraisal fees paid out are less than the amount that the taxes would be reduced if an abatement is granted.
Sometimes the appraisal fees are less. I recently appraised a commercial property in which the assessment was $1.5 to $2 million more than what the property was worth. The situation will likely result in an abatement.
An abatement, once granted, is good for only a year. Sometimes the best thing a property owner can do is establish a working relationship with the head assessor. That way, the assessed value can be negotiated instead of being decided by a magistrate. One homeowner I know lacks such a relationship. He fights with the assessor every year over the value of his property. He thinks he’s being overtaxed. But is it worth the fight?
Over the summer, I appraised the Myrtle Baptist Church in West Newton. Martin Luther King, Jr. used to preach there. When King was assassinated in April 1968, church elders held a series of services to honor his memory and help the community heal.