Just a few weeks ago the Assessor for the Town of Nantucket made a presentation to the Nantucket Association of Real Estate Brokers. Below is a copy of the presentation made, it is an excellent explaination of Nantucket tax rates and assessments.
One thing that seems to surprise many people about Nantucket and the property taxes here is how low the annual tax bill is per assessed value. A home with a $1 million assessment will have an annual tax bill of $3,580 (based on the 2011 mill rate).
To learn more directly from the assesors office follow this link.
Presentation to: NANTUCKET ASSOCIATION OF REAL ESTATE BROKERS
By: Debbie Dilworth, MAA Assessor, Town of Nantucket Wednesday, January 19, 2011
Board of Assessors
- May be appointed or elected. (MGL Ch. 41 s. 24)
- May be 1, 3, 5, 7 or 9 members in a city.
- May be 1,3, or 5 members in a town.
- The Town of Nantucket has a single-member Board and a 3 member Abatement Advisory Committee which was created by vote of Town Meeting in 1994.(Art. 65)
- The Assessor is appointed by and reports directly to the Finance Director with the approval of the Board of Selectmen and Town Manager.
Roles and Responsibilities
- Assessment of all property subject to taxation.
- Maintaining an accurate inventory of all property, including exempt properties
- Betterments and Special Assessments
- Defense of values
- Real and Personal- Tax Levy
- Motor Vehicle and Boat Excise-Local
- Receipts
- Property Transfers
- Address changes
- Subdivisions and lot splits
- Tax maps
- Added charges for improvements or "betterments" for a limited group of properties. IE: Sidewalk repair or sewer privilege fee.
- Abatements and Exemptions
- Appellate Tax Board
Assessments and Valuation (in Massachusetts)
•Constitutional requirement that all property is to be taxed proportionately.
•1961-"8ettigole vs. City of Springfield, MA. SJC declared that proportionality could only be achieved if each parcel of real estate was assessed at its "full and fair value".
•1962-1973-0nly half of the cities and towns in MA complied with the 8ettigole Decision.
•1974-"Sudbury Decision"-City of Sudbury, MA. Gave the Commissioner of Revenue the power and duty to direct local assessors to assess at "full and fair value".
•1975-1979-Citing a lack of sufficient funding, many cities and towns in MA continued to delay the achievement of "full and fair value" as no deadline had been established by the court.
•November 1979-Chapter 797 of the Acts of 1979-Strengthened the Commissioners authority.
- Commissioner to establish guidelines for achieving "full and fair value"
- Cities and Towns must appropriate adequate funding for a revaluation (or the Commissioner will).
2005- The Department of Revenue issued a mandate that communities must also conduct "interim year adjustments" to property values in the years between certifications.
Nantucket's First "Reval"
- Almost thirty years ago Nantucket was one of the earliest communities to be certified as being at "full and fair value" when total property values went from $39,235,561 in 1980 to $668,923,450 in 1981.
- Although property values increased, overall, tax bills were equalized by the drop in the tax rate and the adoption of a split rate.
1980 Single Tax Rate
$128.00
1981 Split Tax Rate
Residential: $ 8.60
Open Space: $ 6.87
Commercial: $ 12.94
The Assessment Process Today
• In Massachusetts, property values are assessed at 100% of market value.
• The assessment date is January 1 of the year prior to the start of the fiscal year.
• Property values are reviewed and adjusted if necessary every year.
• Every 3 years the Commissioner of Revenue certifies that values are at an acceptable level of market (90-110%) and that they were developed by the use of acceptable appraisal standards (Revaluation).
• Fiscal Year 2010 was the most recent Revaluation for the Town of Nantucket.
• Fiscal Year 2013 is the next scheduled Revaluation.
• For the Fiscal Year 2011, assessments are based on ownershil2, and condition of the property as of January 1, 2010.
• Fiscal Year 2011 assessments were developed using sales that occurred during the calendar year 2009.
• They represent a "snapshot" in time of the market, as of January 1, 2010.
The Valuation Process
Assessments are determined through the use of mass appraisal techniques.Mass appraisal is the process of valuing a group of properties as of a given date, using standard methods, and allowing for statistical testing. The standard techni~ used to determine value are:
- Cost: Used for new construction
- Income: Used for Commercial Properties
- Market: Sales Comparison Approach
- Statistical Testing measures both the level and uniformity of assessments to sales price.
Assessment Level
• The assessment level (ASR) is determined by dividing the assessment by the sales price.
• Example: If a property is assessed for $750,000 and sells for $740,000, the ASR is 101%.
• $750,000/$740,000
• For each class of property the ASR must be determined for all sales. Note that for the Fiscal Year 2010 Revaluation, sales from the calendar year 2008 were required. After removing all sales that were not "arms-length" (ie: physical change in the property or a sale between related parties) 102 single family homes sales were used in the analyses.
• The Commissioner of Revenue has determined that the overall median ASR for each class of property must be within 90%-110%. For the Fiscal Year 2010, Nantucket's median for the single family class was 95%.
|
Date |
Use Code |
Sale |
Assessment |
ASR |
|
7/10/2008 |
101 |
$2,140,000 |
$1,932,600 |
90.000/0 |
|
9/15/2008 |
101 |
$1,775,000 |
$1,634,900 |
92.000/0 |
|
5/9/2008 |
101 |
$690,000 |
$633,200 |
92.000/0 |
|
5/6/2008 |
101 |
$1,330,000 |
$1,219,800 |
92.000/0 |
|
9/30/2008 |
101 |
$3,000,000 |
$2,765,700 |
92.000/0 |
|
10/9/2008 |
101 |
$850,000 |
$787,700 |
93.000/0 |
|
4/11/2008 |
101 |
$2,550,000 |
$2,375,000 |
93.000/0 |
|
9/3/2008 |
101 |
$1,460,000 |
$1,376,800 |
94.000/0 |
|
10/16/2008 |
101 |
$2,800,000 |
$2,646,300 |
95.000/0 |
|
3/19/2008 |
101 |
$2,260,000 |
$2,150,800 |
95.000/0 |
|
9/17/2008 |
101 |
$1,125,000 |
$1,071,700 |
95.000/0 |
|
9/24/2008 |
101 |
$2,295,000 |
$2,173,200 |
95.000/0 |
|
8/18/2008 |
101 |
$695,000 |
$658,800 |
95.000/0 |
|
6/23/2008 |
101 |
$1,315,000 |
$1,249,100 |
95.000/0 |
|
6/3/2008 |
101 |
$750,000 |
$714,900 |
95.000/0 |
|
4/3/2008 |
101 |
$750,000 |
$746,100 |
99.000/0 |
|
10/14/2008 |
101 |
$1,500,000 |
$1,531,400 |
102.00% |
|
|
|
|
|
|
Assessment Uniformity
• Once the median ASR for each class has been determined, the absolute variation from each sales ASR must be calculated and summed to determine the average absolute deviation from the median. (coefficient of dispersion or COD) This will determine the uniformity or "horizontal equity" of the proposed values. The Commissioner of Revenue has determined that an acceptable measure of uniformity is a COD of less than 10% for Single Family properties.
• In addition to the analyses by property class, assessment levels and uniformities were measured for all residential properties based on:
Building Style
Building Age
Neighborhood/Location
Lot Size
Each of these "sub-studies" resulted in acceptable medians and COD's.
Total Taxable Value
• For the Fiscal Year 2011, Nantucket has 10,994 Real Property Accounts and 6,964 Personal Property Accounts with a total taxable value of :
• $17,208,429,905
• Nantucket's total taxable value is the 4th highest in the state of Massachusetts following Boston, Cambridge and Newton.
Town of Nantucket Average Single Family Home Values
The Tax “Levy”
• Since medieval times, the property tax has been the largest source of local government revenue. In Nantucket, for the Fiscal Year 2011, real and personal property taxes represent 86 % of the total General Fund* budget.
• *Does not include the Enterprise or Community Preservation Funds.
Tax Rate
As a general rule, the tax rate is determined by dividing the Tax Levy, $63,040,150 by the total taxable value, $17,208,429,905 and then multiplying by 1,000. This would yield a “nominal tax rate” of $3.70.
However, like many communities, Nantucket has a split tax rate which shifts an additional percentage of the tax burden to the commercial class.
For 2011 the Nantucket tax rates are:
• Residential: $ 3.58/$1,000 of assessment
• Commercial: $6.41/$1,000 of assessment
• Open Space: $3.42/$1,000 of assessment
Residential Exemption
• MGL C. 59 section 5c allows a community to provide an exemption to taxpayers who own and occupy their dwelling as their primary residence.
• This exemption may not exceed 20% of the average value in the residential property class.
• The exemption and the percentage, if any, are voted on annually by the Board of Selectmen during the tax classification hearing.
• For the Fiscal Year 2011, the average residential value for Nantucket is $1,524,960 and the exemption using the 20% is $304,992. This amount is subtracted from the assessed value of each qualifying parcel to determine its taxable value.
• Everyone who qualifies for the exemption receives the same credit, regardless of their property’s total assessed value**.
• For the Fiscal Year 2011 the dollar amount of this exemption is $1,092.
**For purposes of applying the residential exemption, it may not reduce the taxable value of a parcel to less than 10% of its’ full and fair cash value.
Tax Bills
• For the FY 2011 tax billing there were 2,272 parcels that received the residential exemption.
• Of these, the average tax bill for the Fiscal Year 2011 was:
• $2,847.
• For comparison, the average tax bill in the state of Massachusetts for the Fiscal Year 2010* was:
•$4,390.
• *Data for 2011 is incomplete at this time as not all cities and towns have reported yet.
Proposition 2 ½
•Prop 2 ½ limits the amount of money that can be raised through real and personal property taxes, the Tax Levy, each year.
• Generally, the Tax Levy can increase no more than 2 ½ % each year without voter approval.
• Proposition 2 ½ has several tools that communities can use to address these limitations.
- override
- capital exclusion
- debt exclusion
• Prop 2 ½ does not limit the increase in individual tax bills which may be increased by more than this amount from one year to the next.
New Growth
New growth is an allowable increase to the tax levy each year and it is comprised of new tax revenue attributable to:
• New Construction (including additions)
• New Parcels (subdivisions)
• Newly taxed articles of personal property
• Parcels that are being assessed for the first time
• New Personal Property items
• The Growth is calculated by multiplying the current fiscal year assessments by the prior years tax rates.
• Because it is tied to building and construction volume, new growth began to decline in FY 2007 and is estimated to continue to decline.
• New growth related to the creation of new lots has also declined due to the limited supply of large tracts for development and competition for open space acquisition.
New Growth to the Tax Base
Calculating the Levy Limit
• The Levy Limit is determined each year and begins with the Levy Base.
• The Levy Base is the prior years Levy Limit.
o Added to that is the 2 ½ % increase,
o Any New Growth,
o Any Overrides voted
• This new total will become the Levy Base for the following year.
Nantucket Levy Limit Calculation FY 2011
2010 2011
Levy Base $50,556,143 $52,503,548
Proposition 2 ½% Increase $1,263,904 $1,312,589
New Growth $683,501 $333,058
Override $0 $0
Levy Limit $52,503,548 $54,149,195
Debt Exclusion
• A Debt exclusion is the allowable amount of principal and interest due for the year that is related to voter approved acquisitions. Ie: Land acquisitions, road and sewer improvements.
• These amounts are added to the Levy Limit for the life of the loan.
• Debt Exclusions are not a permanent increase to the levy limit.
Capital Expenditure Exclusions
• Capital Expenditures are amounts that have been voted by the taxpayers for a one time expense, usually for equipment or vehicles.
• Capital expenditures increase the Levy Limit for 1 year only.
• Capital Expenditures are not a permanent increase to the Levy Limit
Override
• An override is a permanent increase to the tax levy and as a general rule is used to recognize the increased cost of municipal services.
• Because it is a permanent increase to the tax levy it is increase by 2 ½% each year.
Underrides
• Conversely, an Underride is a permanent decrease to the levy.
• Not used very often.
• Usually the result of a service being eliminated.
Maximum Allowable Levy Limit
2010 2011
Levy Base $50,556,143 $52,503,548
Proposition 2 1/2 Increase $1,263,904 $1,312,589
New Growth $683,501 $333,058
Override $0 $0
Levy Limit $52,503,548 $54,149,195
Debt Exclusion $8,890,665 $8,964,893
Capital Expenditure Exclusion $0 $0
Maximum Allowable Levy $61,394,213 $63,114,088
Levy Ceiling
• The Levy Ceiling is the absolute maximum that the Tax Levy can be even with voter approval.
• The Levy Ceiling is 2 ½ % of a communities full and fair cash valuation, or total assessment.
• The difference between a communities Levy Limit and its Levy Ceiling is known as Override Capacity.
Override Capacity, Town of Nantucket
Because the levy ceiling will change relative to assessed values, Nantucket has always maintained a low ratio of Levy to Levy capacity.
• Much like a see saw, as assessed values increase or decrease, the tax rate will inversely change.
• The Tax Levy is the “anvil” in the middle that will ultimately determine the tax bill.
Defense of Values
• Abatements: Taxpayers aggrieved by their property taxes have thirty days from the mailing of the actual tax bills to file an appeal.
• A timely received application is a prerequisite for any appeal.
• Once received, the Board has three months to act on the application.
• Appellate Tax Board (ATB): Taxpayers aggrieved by the decision or inaction* of the Board may file an appeal with the ATB within three months of the Boards decision or inaction.
• *If no action is taken by the Board of Assessors within three months of the date received the application is considered “deemed denied”.
Exemptions
In addition to the Residential Exemption there are certain other personal exemptions such as:
• Veterans: Must have at least a 10% service connected disability or a Purple Heart
• Elderly: Must meet age and income criteria
• Blind: Must have a certificate from the Division of the Blind.
• Deferral: Age and income criteria.
• Hardship: Strict criteria is established locally and must be consistently applied.
• Applications for Personal Exemptions may be made within three months of the date that actual tax bills are issued.
Review this years zoning articles to see how and if they will affect use and development of properties Island wide. 
