Tuesday, December 16, 2008

Property taxes, in plain english

A financial analyst friend of mine has crunched the numbers, as he has for years, usually predicting the next years tax increases within a percentage or two. The bottom line is that Menino is going to manipulate the percentages in this tax year so that he can say he is helping out homeowners, and then he will whack us with up to 10 percent increases in the next couple of years. He can do this for 2009 because the commercial values did not fall as soon or as fast as the residential values, that were set on Jan. 1 2008. So, expect many commercial abatements, but they will come after the rate is set. Since the City is essentially awash in money, having added 7 percent more employees in the last 5 years, he will be able to come up with funds.

The analysis:

After several years of outsized property tax growth in Boston, 2008 and 2009 finds us in the eye of the property tax storm with relatively stable residential taxes thanks primarily to rising commercial taxes that are absorbing a rapidly increasing total tax levy. Residential tax rates will fall slightly from $10.97 per thousand to 10.70 per thousand in 2009 but this will be mostly offset by a lower residential exemption for homeowners. Most property taxpayers will ultimately see lower taxes only due to a fall in the value of their homes. However, concern remains for 2010 as commercial taxes are expected to drop dramatically with the economic slowdown. The result is that residential taxes will rise, perhaps substantially, even if home values continue to deteriorate in 2009. Successful lawsuits from owners of larger commercial properties may exacerbate the shift of tax liability from commercial properties to residential properties in 2010 and beyond.

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