Though Massachusetts isn’t the highest-taxed state in the union (far from it!), it makes sense to research property taxes in each community and find how they’ll affect your bottom line when you purchase a new home. Boston is no different. Though purchasing property in Boston isn’t cheap, property taxes are lower than some Massachusetts counties other U.S. cities. Boston property taxes were on the rise for several years, but over the last two years residents have enjoyed slight drops in tax rates announced each January. It may surprise you to see how Boston’s tax rates stack up against other major U.S. cities.
What Are Boston Tax Rates?
As of January 2016, the property tax rate for Boston is $11 per $1,000 in assessed property values. Though the median annual property tax payment in Boston ranks the 7th highest nationally at $3,794, that figure could easily be misleading because the prices of properties in the state of Massachusetts are also among the highest in the nation. According to Statistics Brain, the average selling price for Massachusetts homes ranked 4th in the nation last year, at a whopping $334,000. The only more expensive states in which you could purchase property were Hawaii, California, and Washington, DC, so it makes sense that higher annual tax payments correlate.
The fact is, the tax rates themselves aren’t astronomical. The prices in suburbs surrounding Boston vary widely. This year, Cambridge comes in at just $6.99 per $1,000. Dedham and Hamilton have much higher tax rates at $15.49 and $17.25, respectively. But those rates are on the rise. The average tax bill of a single-family home anywhere in the state of Massachusetts just went up $206 annually. That’s an increase of 3.9% over last year’s average. Some communities barely raised tax rates at all this year; others, such as Chelsea, saw rate increases of 17%. In Brookline, the average annual tax bill increased $825. The tax rate only decreased in sixteen Massachusetts municipalities.
How Does Boston Compare to Other Major Cities?
Boston vs. NYC
New York City residents are paying nearly twice as much in property taxes as Boston residents this year. The Big Apple’s tax rates clock in at $19.55 this year for Class 1 brackets, which includes residences of up to 4 units. That’s a 7% increase from last year’s tax rate of $19.15. Owners of large rental and commercial properties take a significantly lower hit.
Boston vs. Philadelphia
Philadelphia’s tax rate for 2016 is 1.3998% or $14.00 per $1000 of the assessed real estate price. That rate is broken down so that some goes to the city (0.6317%) and the rest goes to the school system (0.7681%). Property owners in Boston proper definitely pay less in taxes, but residents of some of Boston’s suburbs often equal or exceed Philly’s rates.
Boston vs. Houston
Though residents of the Lone Star State don’t pay state income tax, Texas is home to some of the highest property tax rates in the country that might make up the difference. In 2015, the average property tax payment was $3,327. And while Houston’s tax rates remain the same for 2016, some residents might still end up paying more than they did last year because property values are increasing, along with the assessed values of most properties.
Boston vs. San Diego
The median home price in San Diego, California is $599,000, compared to Boston’s median list price of $1,000,000, up 85% from last year. Because tax rates are similar–San Diego’s is $11.75, just 0.75 more than Boston’s–Boston residents will likely be paying significantly steeper taxes thanks to higher property values.
What Are Boston Property Tax Trends?
Unfortunately, the trend in Boston (and most of Massachusetts) has been steadily climbing property taxes for the last decade.
“Most communities raise taxes . . . despite the fact that property values may have gone down or inflation may have been nonexistent,” said the president of the Massachusetts Taxpayers Foundation in an interview with the Boston Globe.
And the rise of property taxes is outpacing the uptick in Boston property values. Cities aren’t receiving enough state aid to make ends meet, and tight budgets coupled with rising costs result in pulling in funds from the only place cities can: in property taxes. Since 2010, some Boston communities have seen property taxes rise upwards of 50%. In Wellesley, tax rates have skyrocketed 70% since 2006, with no sign of going back down anytime in the near future.
If you’re planning to purchase a home in the Boston area, you might as well plan to be disappointed by your rising tax bill every year because unless you get very, very lucky, you’re likely to see consistent increases over the next several years. Chelsea’s municipal association president said that Boston area communities “are more reliant on the property tax than at any point since 1980.” State funding has been increased but still isn’t even up to par with 2008 levels.
Your property taxes are likely to grow more quickly than the value of your home, and according to experts, that’s not going to change anytime soon.
2 Point Highlight
Though purchasing property in Boston isn’t cheap, property taxes are lower than some Massachusetts counties other U.S. cities.
Unfortunately, the trend in Boston (and most of Massachusetts) has been steadily climbing property taxes for the last decade.
