Essex County 2021 Property Tax Rates: Town by Town guide
Property tax rates for FY 2021 for all 34 cities and towns in Essex County have been certified. Below is a map, so that you can compare tax rates in neighboring towns, followed by the tax rates for each town the last 5 years. The first table shows the tax rates in alphabetical order, while the second lists them from low to high.
Tax rates for each town
Alphabetically (download a copy of this table by clicking here.
From lowest to highest based on 2021 rates (download a copy of this table by clicking here)
Median and Average Tax Rates
The median tax rate for FY2021 is $13.40, down from $13.68 in FY2020, while the average tax rate is unchanged at $13.80. The highest taxed town, Wenham, has a rate 47% higher than the County median, while the lowest, Rockport, is 27% below the median. Or put another way, the highest tax rate in Essex County is double that of the lowest.
How property tax rates are calculated
There are two main points to understand:
The dollar amount raised by property taxes is based on a simple formula: the dollar levy for the previous year plus 2 1/2% (Prop 2 1/2), plus any new growth (e.g. new construction), plus debt service.
The tax rate is then calculated by dividing the dollar amount to be raised by the Assessed Value of all property. For FY 2021 (July 2020-June 2021) Assessed Values are based upon sales during 2019. Sales in 2020 will be used for calculating the FY 2022 tax rates.
20 of Essex County’s cities and towns choose a single tax rate, whereby residential and commercial properties are taxed at the same rate. The other 14 cities and towns choose a split tax rate whereby commercial properties are taxed at a higher rate – in some cases a much higher rate.
A separate report on commercial tax rates will be published in the near future.
For a walk through the tax calculation of a single rate tax town read How Marblehead’s 2021 Tax Rate is calculated
Tax rate changes in 2021
Of the 34 cities and towns in Essex County, 19 have announced decreases in their FY2021 residential tax rate while 14 have had increases approved and one is unchanged.. Decreases of 5% or more were seen in Manchester and Ipswich, while 5% or larger increases were recorded in Merrimac and Amesbury. Bear in mind that a major determinant of the change in tax rates is the movement in Assessed Values. Thus, in a time of rising home prices, a general expectation is that tax rates should be flat to down.
Tax Rates of Neighboring Towns
Where taxes become interesting is when one can compare tax rates in neighboring towns. Many people, especially those moving to the area, whether from Boston or elsewhere, are willing to consider more than one town.There are many factors in the decision about where to live, but tax rates can be a significant influence on the decision, and have become more so with the limitation on the deduction of property taxes from Federal taxation. Some argue that lower property values offset higher taxes. Frequently, however, residents of highly taxed towns cite property taxes as a reason for wanting to move.
Commercial Property Tax Rates:a Town by Town guide
Mortgage Markets Return to Normal
Conforming Mortgage Loan Limits raised for 2021
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
Licensed Sales Agent in Florida
www.OliverReports.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
“If you’re interested in Marblehead, you have to visit the blog of Mr. Andrew Oliver, author and curator of OliverReports.com. He’s assembled the most comprehensive analysis of Essex County we know of with market data and trends going back decades. It’s a great starting point for those looking in the towns of Marblehead, Salem, Beverly, Lynn and Swampscott.”
How Marblehead’s 2021 Property Tax Rate is Calculated
This article, which explains how the tax rate is calculated, is a follow up to Marblehead’s 2021 Property Tax Rate
The formula is actually very simple: take the $ amount of the previous year’s Tax Levy, add 2.5% for Proposition 2 1/2, and also add any New Growth (such as new construction or a condo conversion). This figure is the new tax levy. To this figure is added debt service – the Principal and Interest payable on the town’s debt. – to produce the new Tax Levy.
Here are the numbers for Fiscal Years 2020 and 2021, remembering that FY 2021 runs from July 2020 to June 2021. (more…)
Marblehead’s 2021 Property Tax Rate
Marblehead’s property tax rate for FY 2021 (July 1, 2020 – June 30, 2021) has been certified by the State at $10.42, compared with my estimate of $10.40. Note that the certified rate is 1 ct less than the rate approved by the Board of Selectmen. I suspect that the difference is due to the State rounding down and the town rounding up as by my calculation the actual rate was $10.423.
The FY2021 proposed assessments are based primarily on calendar 2019 market sales and reflect the value as of January 1, 2020. The median SFH assessment for 2021 increased 4.1% from $674,000 to $702,000, and the median tax bill will increase 4.6% from $7,003 to $7,322.
As usual, Marblehead will have the same rate for commercial property and for residential.
I will post an article explaining how the rate is calculated when I have the full details, and will also post my regular articles showing the tax rates for all 34 cities and towns in Essex County when they have all been certified. – only 7 have been to date.
How is Marblehead’s 2020 Property Tax rate calculated?
Essex County 2020 property tax rates: a Town by Town guide
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
“If you’re interested in Marblehead, you have to visit the blog of Mr. Andrew Oliver, author and curator of OliverReports.com. He’s assembled the most comprehensive analysis of Essex County we know of with market data and trends going back decades. It’s a great starting point for those looking in the towns of Marblehead, Salem, Beverly, Lynn and Swampscott.”
Some people use stats the way a drunk uses a lamppost: for support rather than for illuminatio.
Twenty Questions with Marblehead’s Assessor
The FY2020 (July 1, 2019 – June 30, 2020) tax rate has been set at $10.39, down from $10.74 in FY2019. While the median single family (SFH) assessment increased 7.0%, or $44,000, to $674,000, the median SFH tax bill increased by half that – 3.5% – or $236, to $7,003. The commercial rate has once again been set at the same level as the residential rate.
Note that the tax rate includes the cost of debt exclusions (mainly for school construction and items like the new transfer station) voted by residents. Debt service accounts for $0.98 of the 2020 tax rate, down from $1.02 in 2019. Excluding the cost of debt service, the tax rate fell from $9.72 to $9.41.
Marblehead’s 2020 tax rate will again be the second lowest of the 34 cities and towns in Essex County. The highest rate in Essex County belongs to Wenham at $18.94; the lowest Rockport at $10.10; and the median is $13.68.
Approximately 75% of Marblehead’s revenue comes from property taxes. (more…)
How is Swampscott’s 2020 Property Tax rate calculated?
Swampscott’ residential tax rate will drop from $15.20 in Fiscal Year 2019 to $14.30 in FY 2020 (and down from a high of $18.84 in FY 2013). The FY 2020 rate will be the lowest since 2008.
Commercial and industrial property is surcharged at 170%, as in FY 2019, resulting in a tax rate of $27.45, down from $28.83 in FY 2018 (and a high of $35.02 in FY 2013).
The average SFH tax bill has been flat in recent years, while the average commercial tax bill has increased:
Were a single tax rate to be enacted – meaning that residential and commercial property were taxed at the same rate – that rate would be $15.10 for FY 2020. The average SFH and condo tax bills would increase by 5.6% while the average commercial bill would drop 41.2%.
How is the rate calculated?
The method of calculating the tax rate is quite simple: take the $ amount of the previous year’s tax levy, add 2.5% for Proposition 2 1/2, and also add any new growth (such as new construction or a condo conversion). This figure is the new maximum tax levy. To this figure is added debt service – the Principal and Interest payable on the town’s debt.
Note that in recent years, Swampscott has not assessed the maximum allowed under this formula, a decision that has reduced the tax bill for residents. The average tax bill will decline by $23 in FY 2020, a third consecutive year of decline.
Here are the numbers for FY 2018, 2018 and 2020, remembering that the FY runs from July to June.
The Tax Levy calculation
The maximum $ amount that can be raised by the property tax will increase year by year. That is because of the formula: last year’s number plus 2.5% (Prop 2 1/2) plus new growth. In the table above you can see how the FY 2019 maximum tax levy of $50,034,670 becomes the base for FY 2020. Add $1,250,867 for Prop 2 1/2 and new growth of $425,000 to get the new figure of $51,710,537.
To this number is added the debt service – Principal and Interest on the town’s debt, much as homeowners pay P&I on their mortgage. Note that the actual tax levy was less than the maximum allowed by just over $2 million in FY 2018, by $3.4 million in FY 2019 and by $4.4 million in FY 2020. In other words, the amount to be raised through taxes was reduced by these amounts each year.
The Tax Rate
The actual tax rate depends upon the total Assessed Value of all property: residential, and commercial, industrial and personal (CIP). The tax rate is calculated by dividing the total dollar amount to be raised from each class by the Assessed Value of each class. Thus, the headline tax rate will also fluctuate depending upon the direction of Assessed Values.
In simplistic terms, if we assume that the $ amount to be raised increases by a little more than 2 1/2% each year, then if the average Assessed Value also increases by a little more than 2 1/2% the tax rate will be unchanged. If the increase in Assessed Values is less than 2 1/2%, then the tax rate will rise. And if the increase in Assessed Values is more than 2 1/2% then the tax rate will fall. In recent years Assessed Values have been increasing significantly more than 2 1/2% allowing for the tax rate to decline sharply.
Looking at the Swampscott residential tax rate, in FY 2019 it was $15.20, achieved by dividing $42.6 million raised from residential homeowners by the residential AV of $2.8 billion. In FY 2020 the amount to be raised from residential taxpayers is set to increase slightly to $42.9 million, but because the total residential AV increased by 7.2% to $3.0 billion, the headline tax rate has dropped sharply to just $14.30, the lowest figure since 2009.
Comment
The residential real estate market in Swampscott was stable in 2019 (and 2019 prices will be the basis for the FY 20201 tax rate), with the median price of Single Family Homes sold rising less than 1%, while the median price of the condos sold declined 2.5%. Sales in any year represent only a small percentage of the total stock so it does not follow that assessed values calculated by the town will mirror these movements.
As to the tax rate for FY 2021, that depends on a number of factors: the amount of debt service, how much of the maximum tax levy is assessed, and the shift to the CIP class being three of them. Absent some change in methodology, however, it does not seem likely that the residential tax rate will see a further decline in FY 2021.
From a residential real estate perspective, the substantial decline in the tax rate in recent years and the stability in tax bills are both very welcome news and are clearly encouraging more people to decide both to live and work in Swampscott.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Essex County 2020 Commercial property tax rates: Town by Town guide
While most of us look at residential tax rates, fewer are concerned with commercial tax rates. Yet a healthy commercial business environment can contribute significantly to the attractiveness of a town. The map below shows commercial rates in each of Essex County’s 34 cities and towns, followed by a table comparing residential and commercial rates.
(Click here to download a copy of this map and here to download the table)
There is a bigger variation in commercial rates than in residential rates
The lowest rate for both residential and commercial rates is Rockport’s $10.10, but while the highest residential rate is Wenham’s $18.94, there are 11 towns with commercial rates over $20, with the highest being $28.42 in Salem. 20 towns set the same rate for both residential and commercial, while in 3 towns the commercial rate is more than double the residential one.
Why do some towns have different residential and commercial tax rates?
Cities and towns have the ability to increase the percentage of the total tax bill paid by commercial (and industrial and personal) property owners. The percentage of the value of property classified as commercial varies enormously from town to town.
In Marblehead, for example, where residential property is 95% of the total, a 50% tax shift to commercial would increase the average commercial tax bill from $7,003 to $10,508, while reducing the average residential tax bill by only $189.
Towns with a higher percentage of commercial property are more likely to shift an increased share of the tax bill to commercial owners.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Essex County 2020 property tax rates: a Town by Town guide
Property tax rates for FY 2020 for all 34 cities and towns in Essex County have been announced. Below is a map (which you can download by clicking here), so that you can compare tax rates in neighboring towns, followed by the tax rates for each town the last five years. The first table shows the tax rates in alphabetical order, while the second lists them from low to high.
Tax rates for each town
Alphabetically (download a copy of this table by clicking here.
From lowest to highest based on 2020 rates (download a copy of this table by clicking here)
Median and Average Tax Rates
The median tax rate for 2020 is $13.68, down from $14.02 in 2018, while the average tax rate has dropped from $13.95 to $13.80. The highest taxed town, Wenham, has a rate 38% higher than the County median, while the lowest, Rockport, is 26% below the median. Or put another way, the highest tax rate in Essex County is 88% higher than the lowest.
How property tax rates are calculated
There are two main points to understand:
The dollar amount raised by property taxes is based on a simple formula: the dollar levy for the previous year plus 2 1/2% (Prop 2 1/2), plus any new growth (e.g. new construction), plus debt service.
The tax rate is then calculated by dividing the dollar amount to be raised by the Assessed Value of all property. For FY 2020 (July 2019-June 2020) Assessed Values are based upon sales during 2018. Sales in 2019 will be used for calculating the FY 2021 tax rates.
20 of Essex County’s cities and towns choose a single tax rate, whereby residential and commercial properties are taxed at the same rate. The other 14 cities and towns choose a split tax rate whereby commercial properties are taxed at a higher rate – in some cases a much higher rate.
A separate report on commercial tax rates can be read by clicking here.
For a walk through the tax calculation read How is Marblehead’s 2020 Tax Rate calculated?
Tax rate changes in 2020
Of the 34 cities and towns in Essex County, 22 have announced decreases in their 2020 residential tax rate while 12 have had increases approved. Decreases of 5% or more were seen in Lawrence, Amesbury, Lynn, Swampscott, Merrimac and Methuen, while 5% or larger increases were recorded in Wenham, Essex and Rowley. Bear in mind that a major determinant of the change in tax rates is the movement in Assessed Values. Thus, in a time of rising home prices, a general expectation is that tax rates should be flat to down.
Tax Rates of Neighboring Towns
Where taxes become interesting is when one can compare tax rates in neighboring towns. Many people, especially those moving to the area, whether from Boston or elsewhere, are willing to consider more than one town.There are many factors in the decision about where to live, but tax rates can be a significant influence on the decision, and may become more so with the new limitation on the deduction of property taxes from Federal taxation. Some argue that lower property values offset higher taxes. Frequently, however, residents of highly taxed towns cite taxes as a reason for wanting to move.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
How is Marblehead’s 2020 Property Tax rate calculated?
This article, which explains how the tax rate is calculated, is a follow up to Marblehead 2020 Tax Rate drops sharply
The formula is actually very simple: take the $ amount of the previous year’s tax levy, add 2.5% for Proposition 2 1/2, and also add any new growth (such as new construction or a condo conversion). This figure is the new tax levy. To this figure is added debt service – the Principal and Interest payable on the town’s debt.
Here are the numbers for Fiscal Year 2019 and 2020, remembering that the FY runs from July to June.
The Tax Levy calculation
The dollar amount raised by the property tax will increase year by year. That is because of the formula: last year’s number plus 2.5% plus new growth. In the table above you can see how the FY 2019 tax levy of $61,400,179 becomes the base for FY 2020. Add $1,535,004 for Prop 2.5% and $303,231 for new growth and the new figure is $63,238,414. To this number is added the debt service – Principal and Interest on the town’s debt, much as homeowners pay P&I on their mortgage – to give a total amount to be raised of $69,809,220.
The Tax Rate
The actual tax rate depends upon the total Assessed Value of all property: residential, commercial and personal. The tax rate is calculated by dividing the total dollar amount to be raised by the total Assessed Value of all property. Thus, while the $ amount raised by the tax (and therefore the median tax bill) will increase each year, the headline tax rate will fluctuate depending upon the direction of Assessed Values.
In simplistic terms, the $ amount raised before debt service will increase by a little more than 2 1/2% each year, so if the median Assessed Value also increases by a little more than 2 1/2% the tax rate will be unchanged. If the increase in Assessed Values is less than 2 1/2%, then the tax rate will rise. And if the increase in Assessed Values is more than 2 1/2% then the tax rate will rise. One other variable is the cost of debt service.
In FY 2019 the tax rate was $10.74, achieved by dividing the almost $67.8 million to be raised by the $6.3 billion of Assessed value. And in FY 2020 the calculation is $69.8 million divided by $6.7 billion, which produces a rate of $10.39. While the tax rate will decline in 2020, the median tax bill, based on the higher Assessed Values, will increase by $236, or 3.5%, to $7,003.
Note that the calculation of the tax rate is made simpler by the fact that Marblehead’s Board of Selectmen votes each year to have a single tax rate for both residential and commercial tax. In towns which elect to have a differential rate – i.e. by taxing commercial property at a higher rate than residential – there are generally two different tax rates, achieved by dividing the amount to be raised from residential and commercial taxpayers by their respective aggregate Assessed Values.
How does debt service affect the tax rate?
The announced property tax rate announced each year includes the cost of debt service, which Marblehead tries to keep to 10% or less of the total tax bill.
The historic link between tax rates and median prices
This chart shows the tax rate for each Fiscal Year together with the median price for the year used for the calculation (e.g. the median price for 2018 is used for the 2020 tax rate).
Remember that for the tax rate to go down, Assessed Values have to increase by more than the approximately 2 1/2% that the total tax levy will increase each year.
What is the outlook for FY 2021?
The residential real estate market in Marblehead has been firm again in 2019 (and 2020 prices will be the basis for the FY 2021 tax rate). At this stage it looks as though the SFH median price will be around $710,000, a modest 3% increase from 2018’s $689,500. But bear in mind this is the median price of the roughly 240 SFHs that will sell this year out of the more than 6,200 SFHs in Marblehead. This does not imply that the Town’s Assessed Value will increase by 3%, including as it does all types of property.
Nevertheless, it seems reasonable at tis stage to expect that the tax rate in FY 2021 will be similar to that for FY 2020.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Marblehead 2020 Tax Rate drops sharply
This is a good news, bad news story.
The good news: the tax rate for Fiscal Year 2020 (July 1, 2019 to June 30, 2020) will drop from $10.74 to $10.39.
The bad news: taxes paid are going up. The median Single Family Home assessed value increased 7% from $630,000 to $674,000, resulting in a 3.5% increase in the median tax bill from $6,766 to $7,003.
Remember that assessments for 2020 are based upon prices achieved in 2018.
What about Prop 2 1/2, you may ask?
Prop 2 1/2 refers to the entire tax bill in dollars. Take last year’s taxes, add 2 1/2% plus new growth, add in the cost of debt exclusions, and that produces the dollar amount for the following year.
Now take that amount and divide by the assessed value to get the tax rate. That is the rough formula. In towns like Marblehead, there is one rate for all types of property. Other towns choose to tax commercial property at a higher rate.
But sticking to Marblehead, getting the dollar amount to be raised each year is fairly easy. The main variable is the assessed value. In a year when the assessed value goes up sharply, as in 2020 when the median assessed value will increase by 7%, the tax rate will go down, because one is dividing the dollar amount raised by a larger figure.
This simplistic table illustrates how the calculation is made:
The first column represents Taxes of $100,000 to be achieved from an assessed value of $10,000 (I am ignoring mill rates to make the example simpler). $100,000 divided by $10,000 produces a tax rate of $10.00.
The second column shows a 2.5% increase in taxes to $102,5000, and an increase in assessed value to $10,500. Divide one by the other and the tax rate drops to $9.76 – but the dollar amount raised goes up. This is the scenario in Marblehead for 2020.
The third column shows what happens if assessed values go down. The amount to be raised it still $102,500, but dividing this by the reduced assessed value of $9,500 produces a tax rate of $10.79.
The bottom line is that taxes paid nearly always go up. Not universally: in any year some will go up, some down and some stay the same.
But at least now you know that in all probability, when you get that tax bill just before year end, although the tax rate will be going down, your tax bill will be going up.
I shall publish a more detailed explanation of the 2020 Marblehead tax rate in due course, along with tax rates for all 34 cities and towns in Essex County as they are announced in coming weeks. Click Property Taxes to go to the section of the blog with information about property tax rates throughout Essex County.
Andrew Oliver
Market Analyst | Team Harborside | teamharborside.com
REALTOR®
Sagan Harborside Sotheby’s International Realty
One Essex Street | Marblehead, MA 01945
m 617.834.8205
www.OliverReports.com
www.TeamHarborside.com
[email protected]
Sotheby’s International Realty® is a registered trademark licensed to Sotheby’s International Realty Affiliates LLC. Each Office Is Independently Owned and Operated
Twenty Questions with Marblehead Assessor
[Click here to download a copy of this article which first appeared in the Marblehead Reporter on January 31.]
The FY2019 (July 1, 2018 – June 30, 2019) tax rate has been set at $10.74, down from $11.02 in FY2018. While the median single family (SFH) assessment increased 4.5%, or $27,000, to $630,000, the median single family tax bill increased by just 1.7%, or $121, to $6,766. The commercial rate has once again been set at the same level as the residential rate.
Note that the tax rate includes the cost of debt exclusions (mainly for school construction and items like the new transfer station) voted by residents. Debt service accounts for $1.02 of the 2019 tax rate, down from $1.12 in 2018. Excluding the cost of debt service, the tax rate fell from $9.90 to $9.72.
Marblehead’s 2019 tax rate will be the second lowest of the 34 cities and towns in Essex County. The highest rate in Essex County belongs to Amesbury at $18.34; the lowest Rockport at $9.86; and the median is $14.02.
Approximately 75% of Marblehead’s revenue comes from property taxes.
Real-estate assessments for Fiscal Year 2019 were mailed at the end of last year. Assessor Mike Tumulty answered questions about the process.
1. What is the timeframe upon which assessments are based?
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- MT. For FY2019, assessments are based upon values as of January 2018, using sales data for calendar year 2017. Sales that took place in calendar year 2018, therefore, will be the basis for the assessment for FY 2020.
2. What percentage of properties sells each year?
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- MT. In 2017 there were 204 arms-length sales of SFHs, or 3% of the stock of 6,222 houses, and 62 sales of condos, representing 6.3% percent of the stock of 985 units.
- AO. While it is hard to get an accurate read on national statistics, it is certainly true that we stay in our houses longer than do people elsewhere. No surprise there: Marblehead is not only a great place to live, but it is also extremely well run, as demonstrated by our low tax rate.
3. Is there a minimum requirement for assessment purposes?
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- MT.The assessment process requirement is 2 % for each property class, or a minimum of 20 units. Where there are fewer than 20 sales, as in categories such as multi-families and commercial, data for 24 months is used. For FY 2019 that period is July 2016 to June 2018.
4. Can I appeal my assessment? (more…)
Essex County 2019 Commercial property tax rates: town by town guide
While most of us look at residential tax rates, far fewer are concerned with commercial tax rates. Yet a healthy commercial business environment can contribute significantly to the attractiveness of a town. The map below shows commercial rates in each of Essex County’s 34 cities and towns, followed by a table comparing residential and commercial rates.
(Click here to download a copy of this map and here to download the table)
There is a bigger variation in commercial rates than in residential rates
The lowest rate for both residential and commercial rates is Rockport’s $9.86, but while the highest residential rate is Amesbury’s $18.37, there are 11 towns with commercial rates over $20, with the highest being $29.55 in Salem. 20 towns set the same rate for both residential and commercial, while in 3 towns the commercial rate is more than double the residential one.
Why do some towns have different residential and commercial tax rates?
Cities and towns have the ability to increase the percentage of the total tax bill paid by commercial (and industrial and personal) property owners. The percentage of the value of property classified as commercial varies enormously from town to town.
In Marblehead, for example, where residential property is almost 95% of the total, a 50% tax shift to commercial would increase the average commercial tax bill from $6,766 to $10,149, while reducing the average residential tax bill by only $189.
Towns with a higher percentage of commercial property are more likely to shift an increased share of the tax bill to commercial owners.
Andrew Oliver
www.OliverReports.com
Realtor, Sagan Harborside Sotheby’s International Realty
617.834.8205
Essex County property tax rates 2019: Town by Town guide
Property tax rates for FY 2019 for all 34 cities and towns in Essex County have been announced. Below is a map (which you can download by clicking here), so that you can compare tax rates in neighboring towns, followed by the tax rates for each town the last five years. The first table shows the tax rates in alphabetical order, while the second lists them from low to high.
Tax rates for each town
Alphabetically (download a copy of this table by clicking here).
From lowest to highest based on 2019 rates (download a copy of this table by clicking here)
Median and Average Tax Rates
The median tax rate for 2019 is $14.02, down from $14.30 in 2018, while the average tax rate has dropped from $14.17 to $13.95. The highest taxed town, Amesbury, has a rate 31% higher than the County median, while the lowest, Rockport, is 30% below the median. Or put another way, the highest tax rate in Essex County is 90% higher than the lowest.
How property tax rates are calculated
There are two main points to understand:
The dollar amount raised by property taxes is based on a simple formula: the dollar levy for the previous year plus 2 1/2% (Prop 2 1/2), plus any new growth (e.g. new construction), plus debt service.
The tax rate is then calculated by dividing the dollar amount to be raised by the Assessed Value of all property. For FY 2019 (July 2018-June 2019) Assessed Values are based upon sales during 2017. Sales in 2018 will be used for calculating the FY 2020 tax rates.
21 of Essex County’s cities and towns choose a single tax rate, whereby residential and commercial properties are taxed at the same rate. The other 13 cities and towns choose a split tax rate whereby commercial properties are taxed at a higher rate – in some cases a much higher rate.
A separate report on commercial tax rates can be read by clicking here.
For a walk through the tax calculation read How is Marblehead’s 2019 Tax Rate calculated? and How is Swampscott’s 2019 Property Tax Rate calculated?
Tax rate changes in 2019
Of the 34 cities and towns in Essex County, 24 have announced decreases in their tax rate while 10 have had increases approved. Decreases of 5% or more were seen in Andover, Lynn and Swampscott, while 5% or larger increases were recorded in Saugus and Nahant. Bear in mind that a major determinant of the change in tax rates is the movement in Assessed Values. Thus, in a time of rising home prices, a general expectation is that tax rates should be flat to down.
Tax Rates of Neighboring Towns
Where taxes become interesting is when one can compare tax rates in neighboring towns. Many people, especially those moving to the area, whether from Boston or elsewhere, are willing to consider more than one town.There are many factors in the decision about where to live, but tax rates can be a significant influence on the decision, and may become more so with the new limitation on the deduction of property taxes from Federal taxation. Some argue that lower property values offset higher taxes. Frequently, however, residents of highly taxed towns cite taxes as a reason for wanting to move.
Andrew Oliver
www.OliverReports.com
Realtor, Sagan Harborside Sotheby’s International Realty
617.834.8205
How is Marblehead’s 2019 Property Tax Rate calculated?
This article, which explains how the tax rate is calculated, is a follow up to Marblehead 2019 tax rate drops to $10.74.
The formula is actually very simple: take the $ amount of the previous year’s tax levy, add 2.5% for Proposition 2 1/2, and also add any new growth (such as new construction or a condo conversion). This figure is the new tax levy. To this figure is added debt service – the Principal and Interest payable on the town’s debt.
Here are the numbers for Fiscal Year 2018 and 2019, remembering that the FY runs from July to June.
The Tax Levy calculation
The dollar amount raised by the property tax will increase year by year. That is because of the formula: last year’s number plus 2.5% plus new growth. In the table above you can see how the FY 2018 tax levy of $59,592,925 becomes the base for FY 2019. Add $1,489,823 for Prop 2.5% and $317,431 for new growth and the new figure is $61,400,179. To this number is added the debt service – Principal and Interest on the town’s debt, much as homeowners pay P&I on their mortgage – to give a total amount to be raised of $67,841,293.
The Tax Rate
The actual tax rate depends upon the total Assessed Value of all property: residential, commercial and personal. The tax rate is calculated by dividing the total dollar amount to be raised by the total Assessed Value of all property. Thus, while the $ amount raised by the tax (and therefore the average tax bill) will increase each year, the headline tax rate will fluctuate depending upon the direction of Assessed Values.
In simplistic terms, the $ amount raised before debt service will increase by a little more than 2 1/2% each year, so if the median Assessed Value also increases by a little more than 2 1/2% the tax rate will be unchanged. If the increase in Assessed Values is less than 2 1/2%, then the tax rate will rise. And if the increase in Assessed Values is more than 2 1/2% then the tax rate will rise. One other variable is the cost of debt service, which is currently projected to be stable for the next few years.
In FY 2018 the tax rate was $11.02, achieved by dividing the almost $66.3 million to be raised by the $6.0 billion of Assessed value. And in FY 2019 the calculation is $67.8 million divided by $6.3 billion, which produces a rate of $10.74. While the tax rate will decline in 2019, the median tax bill, based on the higher Assessed Values, will increase by $121, or 1.7%, to $6,766.
Note that the calculation of the tax rate is made simpler by the fact that Marblehead’s Board of Selectmen votes each year to have a single tax rate for both residential and commercial tax. In towns which elect to have a differential rate – i.e. by taxing commercial property at a higher rate than residential – there are generally two different tax rates, achieved by diving the amount to be raised from residential and commercial taxpayers by their respective aggregate Assessed Values.
How does debt service affect the tax rate?
The announced property tax rate announced each year includes the cost of debt service, which Marblehead tries to keep to 10% or less of the total tax bill. The first major reduction in debt service is not currently due until FY 2026.
What is the outlook for FY 2020?
The residential real estate market in Marblehead has been strong again in 2018 (and 2018 prices will be the basis for the FY 2020 tax rate). At this stage it looks as though the SFH median price will be around $690,000, an increase of about 4% from 2017’s $665,000. But bear in mind this is the median price of the roughly 210 SFHs that will sell this year out of the more than 6,200 SFHs in Marblehead. This does not imply that the Town’s Assessed Value will increase by 4%, including as it does all types of property.
Nevertheless, with debt service forecast to be similar to the FY 2019 level, it seems reasonable to expect that the tax rate in FY 2020 will be similar to that for FY 2019 or slightly lower.
www.OliverReports.com
Swampscott’s 2019 Property Tax rate drops sharply – again
The FY 2019 residential property tax rate for Swampscott will drop from $16.00 in 2018 (and $17.45 in 2017) to $15.20 in 2019, the lowest rate since 2009.
The commercial rate will also drop to $27.45, from $28.83 in 2019 and $32.20 in 2017.
For more details and an explanation as to how the rates are calculated read How is Swampscott’s 2019 Property Tax rate calculated?
www.OliverReports.com
Marblehead 2019 Property Tax rate drops to $10.74
Marblehead’s Fiscal Year 2019 (July 1, 2018-June 30, 2019) tax rate has been certified by the State at $10.74, a drop of 2.5% from $11.02 in 2018, and the lowest rate since 2012. The median tax bill will increase by 1.7%, or $121, to $6,766. As a reminder, the tax rate for FY’19 is calculated using 2017 prices. 2018 prices will be the basis for the FY 2020 tax calculation.
I will publish a detailed explanation of how the tax is calculated next week. (here it is: How is Marblehead’s 2019 Tax Rate calculated?). When they are available, I shall also publish a table of the tax rates for each of the 34 cities and towns in Essex County.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, please contact Andrew Oliver on 617.834.8205 or Kathleen Murphy on 603.498.6817.
If you are looking to buy, we will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Are you thinking about selling? Read Which broker should I choose to sell my house?
Andrew Oliver and Kathleen Murphy are Realtors with Sagan Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
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