Property Tax Exemptions 101

 

Property tax bills take a big chunk of many taxpayers’ incomes, particularly in Shutesbury. Wouldn’t it be great to get a break on this expense—especially for low-income persons, seniors, and others in need?

Exemptions take many forms, but there are two major types:  exempt real estate and exempt persons. In this discussion, we will focus on exempt persons.

Property tax exemptions help lighten the tax load for those who qualify. Municipalities are at least partially reimbursed by the state of Massachusetts for exempted property tax dollars.

Most tax exemptions hail from Massachusetts General Law (MGL) Chapter 59, Section 5 which contains many clauses pertaining to specific exemptions.

For most exempt persons, there are general eligibility requirements that must be met as of July 1. Taxpayers must have at least partial ownership in the property for which they are seeking an exemption and that property must be their primary domicile. Applicants who own the property together with someone other than a spouse will receive a partial exemption. In the case of a senior exemption or exemption for a minor, the appropriate age must be documented by July 1.

For income and financial hardship exemptions, income and/or assets must be proved through gross receipts (all income, regardless of the source) and/or whole estate (all other assets accessible by the applicant, such as pensions and other retirement accounts, stocks, bonds, cash, etc.).

Exemptions must be applied for each year, usually, by April 1 or three months after the actual, (not preliminary), tax bills are mailed (if later). Timely filing is essential, as assessors may not act on late applications by law. Assessors have three months from the date the application is received to act; if they do not, your application is deemed denied. The three-month period may be extended, in writing, by mutual consent. 

If your application is denied, you may appeal your case to the Appellate Tax Board in Boston within three months of the denial or deemed denial.

In most cases, eligibility under MGL c. 59 § 5 is determined by state statute, although assessors have some input and flexibility for setting parameters for the Financial Hardship Exemption (clause 18). Municipalities also have the ability to tailor some exemptions through the “local option” process, usually through the town or city’s governing body. The Senior Exemption (clause 41C), requires a ballot vote at a municipal election.

The list of exemptions is fairly long, and the rules and regulations can be complicated.  For the purposes of this and subsequent posts on this subject, I will try to simplify the various types of exemptions to give an overview of what is available at both the state and local levels. Chapter 7 of the Massachusetts Division of Local Services Training Course 101, Introduction to Assessment Administration:  Law, Procedures and Valuation, gives a very good explanation of this subject matter and I encourage you to read it if you want to drill down on a specific type of exemption. Your local Assessor’s Office is a font of information on all things pertaining to property taxes, including exemptions. Give them a shout and they will be happy to explain the details of any exemption for which you believe you are eligible.

There are multiple exemptions that apply to seniors as well as veterans. Senior tax exemptions will be covered in a future post, as will the residential exemption—a local option that shifts the tax burden within the residential class to higher-valued properties, second homes, and rental properties.

To get started, here are some examples of personal tax exemptions which I have linked to their State Tax/Application Forms. The following exemptions are provided for under  MGL c. 59 § 5.

Blind Persons - Clause 37 or 37A

Municipalities may accept clause 37A, which increases the exemption to $500 from the $437.50 provided in clause 37. Otherwise, all eligibility requirements are the same. The applicant must submit a certification from the Commission for the Blind every year for which the exemption is requested, and must prove domicile and property ownership.

Veterans - Clauses 22, 22A Through 22H

Disabled veterans, their spouses (if they own the property), surviving spouses (not remarried), and surviving parents of those who died during military service can be awarded property tax exemptions ranging from $400 to the full amount of the property tax. Applicants must prove eligibility through service records, residency requirements (the amount of time one has lived in MA), as well as ownership of and residence in the property under consideration.

If the municipality has voted to adopt clause 22H, surviving parents or guardian of those who died during active duty may receive a full property tax exemption if they meet the criteria:  The surviving parents or guardian must have lived in the state for five years before the start of the tax year or the deceased veteran must have lived in Massachusetts for six months or more before entering military service.

Surviving Spouse and Minor Child of Firefighters and Police Officers - Clauses 42 and 43

Surviving spouses and minor children of police officers and firefighters killed in the line of duty are eligible for a full exemption from property taxes. The spouse must not be remarried. In cases where the spouse owns the domicile with another person, the exemption will apply to only the percentage of the applicant’s ownership stake in the property.

Optional National Guard and Reservist - Clause 56

Passed as part of the 2010 Municipal Relief Act, clause 56 is a local option personal exemption for military personnel.

Municipalities that accept clause 56 may allow a partial or complete tax exemption to National Guard or Reservists who are deployed overseas. This clause expires two years after acceptance unless the governing body votes to renew.

Since this is a local option only, there is no state reimbursement, therefore the municipality shoulders the expense of any exemption granted.

Next time, we’ll delve into the wonderful world of senior tax exemptions.

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