Supplemental Tax Assessment Letter
Board of Assessors
Fiscal Year 2008
Supplemental Tax Assessment on New Construction
Chapter 46 Sections 41 & 42 of the Acts of 2003
(Amending Massachusetts General Law Chapter 59 Section 2D)
You are receiving this cover letter and bill because your property
has met or exceeded the guidelines for a Supplemental Tax Assessment
for Fiscal Year 2008. Below you will find a summary of information
pertaining to this new tax reform as passed in the Acts of 2003,
formally know as the Hopkinton Bill. Please review this information
carefully and if you have any questions please contact our office
and we will be happy to assist you.
SUMMARY:
Under MGL Ch. 59 §2D, cities and towns shall make a pro rata tax
assessment on the value of certain improvements to real estate made
after the January 1 assessment date. The assessment is made only on
those parcels for which an occupancy permit is issued during the
fiscal year and the new construction increases the parcel value by
over 50 percent. This assessment is in addition to the regular
property tax that is assessed on the property based on its January 1
status. It is calculated by applying the tax rate to the value of
the improvement and pro-rating that amount over the remainder of the
fiscal year after the permit was issued. If the permit was issued
between January 1 and June 30, a pro forma tax assessment may be
imposed for the following fiscal year as well. In addition, the
assessors must abate property taxes on any parcel in the community
whenever it loses more than 50 percent of its value due to fire or
other natural disaster after the assessment date. The purpose of
this supplemental assessment is to provide the city or town with
some of the real estate taxes that would have been due for the
fiscal year if the new construction had existed on that year’s
assessment date.
Under a recent amendment, the statute now applies automatically
unless the Department of Revenue is notified in writing by the
selectmen, town council or city council, with the mayor's approval
if required by law, of its rejection. Previously, the statute only
applied if accepted by voter referendum.
Assessors must assess supplemental assessments on any qualifying new
construction for which an occupancy permit has been issued, and
grant abatements on any qualifying property loss that occurs after
July 31, 2003, the effective date of the amendment.
SUPPLEMENTAL ASSESSMENTS PROCEDURE:
A supplemental tax assessment is made on a real estate parcel for
the fiscal year whenever;
a temporary or permanent occupancy permit is issued for that parcel
during that fiscal year, and the new construction or improvements
increases the assessed value of the parcel by over 50 percent. In
some cases, a supplemental tax assessment may be made for the
following fiscal year as well.
A. Occupancy Permits
Assessments are triggered by the issuance of a temporary or
permanent occupancy permit. Therefore, the assessors and building
inspectors will have to develop a system for ensuring that the
assessors’ office receives timely notification of all occupancy
permits issued.
B. Assessment
The Pro Rata Supplemental Assessment will be pro-rated based on the
number of days left in the fiscal year after the Occupancy Permit is
issued. The assessment is based on the increased valuation that
results from the parcel’s being improved by new construction after
the regular tax assessment on the property was determined for that
fiscal year. An assessment may be made only if the value of the
parcel, as improved by the new construction, is more than 50 percent
higher than the assessed value for the year. No assessment is made
if the construction results in a 50 percent or less increase in the
valuation of the parcel.
The pro rata assessment is computed by applying the tax rate for the
current fiscal year, i.e., the fiscal year in which the occupancy
permit is issued, to the value of the improvement and multiplying
the result by a fraction.
a. The value of the improvement is the difference between the
assessed valuation of the parcel for the current fiscal year, and
the valuation of the parcel as improved, i.e., the assessed
valuation that the parcel would have had if the improvement had
existed on that year’s assessment date.
b. The numerator of the fraction is the number of days remaining in
the fiscal year after the permit was issued and the denominator is
365.
EXAMPLE:
January 1, 2005 assessment $70,000, current assessment $280,000,
date of Occupancy Permit, September 1, 2005, increase in value is
$210,000, value increase is greater than 50% therefore a
supplemental bill shall be issued for 303 days of occupancy, tax
rate is $13.52 yielding a per diem (daily) rate of $7.78. Total
Supplemental tax of $2,356.92 is assessed and a bill is generated by
the Tax Collector.
For additional information visit the Department of Revenues web
site: http://www.dls.state.ma.us/PUBL/IGR/2003/Igr_03_209.pdf