Glossary of Terms
A reduction or elimination of a real or personal property tax, motor vehicle excise, a fee, charge, or special assessment imposed by a governmental unit.~ Granted only on appliation of the person seeking the abatement and only by the committing governmental unit. (See~Commitment ).
Arms Length Sale
A transfer of property ownership between a willing seller not under compulsion to sell and a willing buyer not under compulsion to buy. The sale price is the amount of money, or its equivalent, that probably would be arrived at through fair negotiations taking into consideration the uses to which the property may be put and allowing a reasonable time for exposure to the market.
A value assigned to real estate or other property by a government as the basis for levying taxes. In Massachusetts, assessed valuation is based on the property's~full and fair cash value~as set by the Assessors. (See~Ad Valorem;~Full And Fair Cash Value)
The date property tax liability is fixed. In Massachusetts, property taxes are assessed as of the January 1 prior to the fiscal year. Assessors determine the physical status of taxable~real~and~personal property, its ownership,~fair cash value~and usage classification as of that date. By local option (MGL Ch. 59 §2A9a), the physical status of real property on June 30 is deemed to be its condition on the previous January 1.
An amount levied on boats and ships in lieu of a~personal property tax~for the privilege of using the Commonwealth’s waterways. Assessed annually as of July 1, the excise is paid to the community where the boat or ship is usually moored or docked.
Chapter 61 land
Forest, agricultural/horticultural, and recreational lands valued according to MGL Chapters~61,~61A, and~61B. Land is valued at its current use rather than the full and fair cash value. The commercial property tax rate is applicable for land defined under these chapters.
Classification (tax assessment)
As related to setting a~tax rate, selectmen or the city council may vote at a required classification hearing to create as many as four different tax rates for~residential, open space, commercial, and industrial and personal property.
Classification of real property
Assessors are required to classify all~real property~according to use into one of four classes: Residential, Open Space, Commercial, and Industrial. Having classified its real property, local officials are permitted to determine locally, within limits established by statute and the Commissioner of Revenue, what percentage of the tax burden is to be borne by each class of real property and by personal property owners. (See~Classification of the Tax Rate)
An authorization to collect taxes, fees or other charges due a municipality. For example, the assessors' commitment of real estate taxes authorizes the collector to pursue and receive payment from property owners.
Cyclical inspection program
A cyclical reinspection program involves completing an interior and exterior inspection of all property over a multi-year period, not exceeding nine years. For additional information see~Technical Assistance Best Practice:~Assessors' Property Inspection Programs
Data collection (appraisal)
Process of inspecting real and personal property and recording its attributes, quality, and condition.
A discharge, established by statute, from the obligation to pay all or a portion of a property tax. The exemption is available to particular categories of property or persons upon the timely submission and approval of an application to the assessors. Properties exempt from taxation include hospitals, schools, houses of worship, and cultural institutions. Persons who may qualify for exemptions include~veterans,~blind individuals,~surviving spouses, and~persons over 70 years of age.
Exemption status is determined as of July 1. All qualifying factors must be met as of that date.
Since 1974, the Commonwealth and municipalities have operated on a budget cycle that begins July 1 and ends June 30. The designation of the fiscal year is that of the calendar year in which the fiscal year ends. For example, the 2000 fiscal year is July 1, 1999 to June 30, 2000. Since 1976, the federal government fiscal year has begun October 1 and ended September 30.
Full and fair cash value (FFCV)
Fair cash value has been defined by the Massachusetts Supreme Judicial Court as "fair market value", which is the price an owner willing but not under compulsion to sell ought to receive from one willing but not under compulsion to buy. It means the highest price that a normal purchaser not under peculiar compulsion will pay at the time, and cannot exceed the sum that the owner after reasonable effort could obtain for his property. A valuation limited to what the property is worth to the purchaser is not market value. The fair cash value is the value the property would have on January first of any taxable year in the hands of any owner, including the present owner" (Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).
Full Measure and List
An inspection program completed by assessors to maintain up-to-date property records. Inspections are usually carried out by assessors, in-house staff or by contract data collectors. Properties are literally measured and re-listed in the assessors' records with any changes in conditions since the last inspection as indicated on field cards. Also referred to as a cyclical inspection program,~BLA~recommends a full measure and list be completed at least every 7-to-10 years.
Interim Year Valuation Adjustment
State law requires that local~assessed values~reflect market value every year. Every three years,~BLA~reviews and certifies that an individual community's assessed values meet the standard. In between these~triennial revaluations, a community should complete an annual analysis to determine whether an interim year value adjustment is warranted. Depending on market conditions and property value trends, adjustments may increase, decrease or leave values unchanged. If the overall assessed value of the community changes by 10 percent, up or down, BLA must be notified.
The amount a community raises through the property tax. The~levy~can be any amount up to the~levy limit, which is re-established every year in accordance with~Proposition 2½ provisions.
A legal claim against real or personal property to protect the interest of a party (i.e., a city or town) to whom a debt is owed (i.e., taxes). In the case of real property, the lien in favor of a municipality automatically arises each January 1, but must be secured through other action. On other property, a lien must be recorded to become secure. (See~Lien Date)
The date a lien arises on real property to protect the municipality’s right to payment of taxes. Property tax liens arise by law on the January 1 assessment date. The lien is secured when the collector makes a tax taking and places the property in tax title. Unless the lien is secured, it expires if five years elapse from the January 1 assessment date and the property is transferred in the meantime. Securing a lien on a~motor vehicle~or boat excise, personal property tax and on~betterments~requires recordings at the registry of deeds.
Motor Vehicle Excise (MVE)
A locally imposed annual tax assessed to owners of motor vehicles registered to an address with in the community. The excise tax rate is set by statute at $25.00 per $1000 of vehicle value. Owner registration and billing information is maintained by the~State Registry of Motor Vehicles~and is made available to a city or town, or to the Deputy Collector who represents it.
The additional tax revenue generated by new construction, renovations and other increases in the~property tax~base during a calendar year. It does not include value increases caused by normal market forces or by revaluations. New growth is calculated by multiplying the~assessed value~associated with new construction, renovations and other increases by the prior year tax rate. The additional tax revenue is then incorporated into the calculation of the next year's~levy limit. For example, new growth for FY06 is based on new construction, etc. that occurred between January and December 2004. In the fall of 2005, when new growth is being estimated to set the FY06 levy limit, the FY05~tax rate~is used in the calculation.
A unit of~real property~used for the assessment of~property taxes. A typical parcel consists of a plot of land (lot) defined by a deed and any buildings located there.
Personal Property Tax
Movable items not permanently affixed to, or part of the real estate. It is assessed separately from real estate to certain businesses, public utilities, and owners of homes that are not their primary residences.
The assessors in each Massachusetts municipality must place property in one of the following classes.
0 - Multiple-Use
1 - Residential
2 - Open Space
3 - Commmercial
4 - Industrial
5 - Personal Property
6 - Forest (Chap 61)
7 - Agricult./Horticult. (Chap. 61A)
8 - Recreational (Chap 61B)
9 - Exempt Property
Within each class, property can be assigned to any of several property types. Each type is assigned a three digit type code consisting of the class number plus two digits that identify the specific type within a class. See the reference document entitled Property Type Codes for detailed information.
Property in classes 1-5 is a major consideration in the approval of tax rates
Proposition 2 1/2
State law enacted in 1980 that regulates local property tax administration. Major provisions of this legislation are located in MGL~~Ch 59 - Assessment of Local Taxes § 21C ~and relate to the determination of a levy limit andlevy ceiling for each town.
Quarterly Tax Bills
Local option to issue two estimated (or three estimated when authorized by the General Court) property tax bills followed by two (or one, if three estimated) regular bills by prescribed dates.
Land, buildings and the rights and benefits inherent in owning them.
Used to determine the location of the property, indicate the size and shape of each parcel, and show its relation to features that affect value. Maps also provide a complete inventory of all land parcels, helping to minimize the problems of omitted parcels and duplication of listing. Also referred to as assessors' maps.
The amount of property tax stated in terms of a unit of the municipal tax base; for example, $14.80 per $1,000 of assessed valuation of taxable~real and personal property.~ ~
The legal requirement that a community’s~assessed value~on property must reflect its market, or~full and fair cash value.