Property Tax 101

This information about real estate taxation is designed to explain the process leading to a tax bill and attempts to dispel many of the common misconceptions associated with this often-misunderstood subject. Slightly over half the money needed to fund the City’s government must be raised through property taxation. The remainder of the revenue comes from other sources, such as state aid and local receipts.

Massachusetts’ municipal law permits two types of local property taxation – real estate and personal property. Since it affects the greatest number of residents, most public attention is focused on the real estate tax.

You can find the latest list of property values here.

You can search property information here.

HOW IS PROPERTY VALUE DETERMINED?

The average residential dwelling in Greenfield gets its new assessment each year from the Assessor’s Office’s analysis of the property sales market. You could correctly say that the amount your new neighbors paid your old neighbors for the houses in your area provided the assessor with the basis for your new assessment. The assessors program the mass appraisal system with relevant sales information and it generates new values for similar properties that did not sell.

It is important to understand that your fiscal year assessment is based on sales information that took place more than a year before the new assessment appears on your bill. For instance, the FY23 assessments are meant to reflect the value of your property on January 1, 2022 and were derived from sales information obtained in calendar year 2021. They do not reflect the property’s current value. Unlike many appraisals that are meant to reflect current value, assessments are retrospective and look back in time to arm's length sales that have already taken place (an arm's length transaction is one between unrelated parties who are each acting in their own best interest).

ASSESSED VALUE & TAX RATE

Every year the Assessor’s Office adjusts all of the City’s taxable property according to a procedure outlined in Massachusetts General Law. The new assessed value is designed to reflect the property’s full and fair cash value on the first day of January prior to the December bill on which it first appears. It is important to note that your assessed value is a year old when it appears on your bill, and is not intended to be a reflection of the property’s current value. The assessors then add up the total assessed value of all of the City’s taxable property.

The City’s Accounting & Finance Department provides the assessors with exactly how much revenue must be raised through property taxation. It is this revenue figure, divided into the total assessed value of the City’s taxable property, that determines the basic equalized tax rate per $1,000 of assessed value. Some communities, including Greenfield, use this rate to tax all classes of property.

Every five years, subject to the dictates of the Commissioner of Revenue, the City is required to undergo a recertification procedure. This is commonly known as a revaluation year; the last one was in Fiscal Year 2022. In past years, it was at this time that property owners usually saw the greatest change in their property assessments. With the use of computerized mass appraisal systems, most communities, including Greenfield, now adjust their property assessments on a yearly basis. These assessments closely follow the fluctuations in the marketplace and reflect property values on the 1st of January prior to the bill on which the new assessed value first appears.

WHAT MAKES A TAX BILL GO UP OR DOWN?

Many factors can affect the total amount of your property tax bill and often many influences are at work at the same time. Historically, the annual cost of funding a city increases each year, much in the same way the cost to maintain a household increases each year. If nothing else changed, this increase would more than likely cause your tax bill to go up.

These factors could contribute to an increase:

• Improvement to a property in the form of an addition, finished basement or attic, or other alteration that would increase the property’s market value.
• A disproportionate increase in the market value of a particular section of the City when compared to another section.
• The discovery by the assessors of incorrect property information, such as an additional apartment unit, bathroom, or finished basement which was not recorded on the previous assessment.
• In the case of income-producing property, the increase of income vs. the cost of doing business.
• Loss of taxable property to tax exempt status, thereby diminishing the tax base.

These factors could contribute to a decrease:

• A disproportionate decrease in the market value of a particular section of the City when compared to another section.
• A reduction in the value of the property as a result of an alteration made of the structure.
• The deterioration of the property as a result of neglect, disaster, or accident.
• In the case of income-producing property, either loss of income or a change in the income expense ratio.
• Reduction of a form of revenue-consuming municipal service(s).
• The addition to the tax base of taxable property.
• Other forms of budget reduction.

As you can see from above, there are many dynamics to each tax bill. Any single factor, but usually a combination of factors, will influence the amount of your bill. Although an average tax bill can be statistically produced, very few bills would actually reflect the statistical average.

WHAT ABOUT PROPOSITION 2 ½?

Simply stated, Proposition 2 ½ says that a community cannot collect any more than 2.5% above the maximum amount it was legally allowed to collect through property taxation in the previous year. This refers to the total amount that the City collects from the community and not the amount it collects from an individual taxpayer.

WHAT IS GROWTH AND WHY IS IT IMPORTANT?

Growth, when referred to by municipal officials, means property eligible for taxation this year that was not there last year. The reason so much importance is attributed to the growth figures is that the infusion of this new revenue assists in defraying the impact of budget increases on the tax bill. Large capital building projects normally contribute to the bulk of the growth figures, but the simple addition of a deck to the back of a house is also part of the calculation. The cumulative effect of growth on the City’s economy can often reduce a tax bill by a couple of percent over what it would have been had this growth not occurred.

SUMMARY

Although a community’s tax rate or rates are often a measure of comparison of one city to another, your actual tax bill consists of not one, but two parts – the tax rate and the property’s value assessment. The better comparison would be to compare a similar home in a like neighborhood and the bottom line of an actual tax bill.

Remember, the City’s budget and the size of the portion of those funds that come from property taxation determine the amount property owners are asked to contribute in the form of their tax bills. The property assessment and tax rate are the mathematical way in which that sum is realized.

The City maintains a computerized mass appraisal system and periodically reviews, through various processes, all its taxable property. The resulting citywide adjustments made to the property database assure taxpayers the most equitable distribution of the tax burden Greenfield tax assessors can provide. Internet access to this information offers Greenfield’s citizens a clear look at the statistical component of their property assessment and a way to track any discrepancies that might warrant correction now and into the future.