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 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
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
Twenty Questions with the Marblehead Assessor
Tax bills went out Dec. 27. If you’ve ever wondered how those bill break down here is your answer.
The FY2017 (July 1, 2016 – June 30,2017) tax rate has been set at $11.01, down from $11.10 in FY2016. The median single family (SFH) assessment increased 6.1%, or $33,000, to $578,000, and the median single family tax bill increased 5.2%, or $314, to $6,364.
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 the transfer station) voted by residents. These account for $1.07 of the 2017 tax rate, up from $0.99 in 2013. Excluding voter approved exclusions, the tax rate fell from $10.11 to $9.94.
Marblehead’s 2017 tax rate will be the third lowest of the 17 North Shore cities and towns and the fourth lowest of 34 Essex County communities. The highest rate in Essex County belongs to Amesbury at $19.95; the lowest Nahant at $10.47; and the median is $14.41. Swampscott’s residential rate is $17.45 and it commercial rate $32.20.
Approximately 70% of Marblehead’s revenue comes from property taxes.
Real-estate assessments for Fiscal Year 2017 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?
MT. For FY2017, assessments are based upon values as of January 2016, using sales data for calendar year 2015. Sales that took place in calendar year 2016, therefore, will be the basis for the assessment for FY 2018.
2. What percentage of properties sells each year? (more…)
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