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Boston - Tax Levy Burden Grows & Shifts to Businesses

by John Ryder, Boston, July 2012

Property tax levies in the City of Boston have risen the past five years, even while the real estate market struggled. The news is even worse for business property owners because their share of the tax burden is growing much faster than it is for the residential class.


A Leap in Levies


Boston will collect more than $1.6 billion in property tax levies for 2012. This represents an increase of more than $279 million in just five years.


The reason for the levy hike is simple -- local government services are not free. Each year, the levy increases an average of 5% +/-to pay for public schools, police, fire protection and other necessary city services.


Significant Shift


A law change in 2008 has drastically impacted how the city apportions the total tax levy among different classes of property. It allows property taxes to shift from residential to the commercial, industrial and personal property (CIP) classes. In just five years, the levy burden shifted significantly from residential to CIP by 19.6% even though assessed values remained flat.


From 2008-2012, the tax levy on residential property went up by more than $86 million. During the same period, the increase for CIP was more than double the residential hike. As a result, CIP consistently paid the majority of levy increase (See graph).


What Can You Do?


While you cannot control escalating tax levies or which property class pays the most, you can manage your share of property taxes.


Even if your values are flat or declining, it's worthwhile to be sure that your share of the levy is fair. Carefully analyze your tax assessment, taking into account: cost, income, obsolescence and any other specifics that might impact your value. Look for mathematical and valuation errors. Even a small mistake can over inflate your tax bill.


Finally, make full use of the appeal system. Assertive appeals are the best way to manage your taxes and ensure you are paying only your fair share.