Tax Facts & FAQs
Real Estate Taxes
- How is My Property Value Determined?
- Understanding Your Quarterly Tax Bill
- Exemption Procedure
- Elderly Tax Deferral
- Abatement Procedure
- Frequently Asked Questions
How is my Property Value Determined?
Property taxes are the main source of revenue for most municipalities, including Salem. Some properties are exempt from real estate taxes, including land owned by the city or state, churches, and charities. All non-exempt residential properties and non-exempt commercial/Industrial properties are taxed at a rate voted on and adjusted by the City Council every year. The Fiscal year 2023 Residential tax rate is $12.51 per thousand and the Commercial/Industrial/Personal Property tax rate for Fiscal Year 2023 is $25.25 per thousand. The fiscal year runs from July 1st to June 30th of each year, and each fall the city council determines what the tax rate for the upcoming fiscal year will be based on their approved city budget.
Your property tax bill is based on the assessed value of your property, any exemptions for which you qualify, and the property tax rate set by the City Council. Your property tax assessment is determined on January 1st of each year (Assessment Date). It is based on valid sales from the previous calendar year and Income and Expense information received for commercial and Industrial properties. So, for example, FY2023 values are made as of January 1st, 2022 and are based on valid sales from calendar year 2021 (the assessment date establishes ownership and occupancy of each parcel. If your property was purchased, sold, subdivided, renovated or suffered fire or water damage after January 1, these conditions will be reflected on the 3rd quarter bills). The value is also based on the neighborhood you live in, the square footage and age of your property and house. Our goal is always to come as close as possible to full and fair cash value of your property.
Properties that have building permits with the City's Building Department will garner an inspection from the Assessors Office (which is not to be confused with the Building Department's procedures of signing off on work done to code). Inspections are both interior & exterior and takes roughly 15 minutes of your time. Assessors cannot force an inspection, however assessors have the power to estimate the work done and adjust your values accordingly if we are not granted physical access.
Additionally, every 9-10 years, the assessor’s department is required to inspect each property in the City as mandated by the State Department of Revenue as a cyclical inspection. You may meet one of our assessors when they come to inspect your property. If you are not home, they will leave a letter so you can reschedule an inspection at a time more convenient for you. You are not required to allow an inspection, but an inspection must be done if you wish to be granted an abatement on your taxes.
For more information, check out the Taxpayer's Guide to Assessing
Understanding Your Quarterly Tax Bill
The fiscal year runs from July 1st to June 30th of each year. Your tax bill, which is issued by the City Collector, is based off this fiscal year system and is broken into four quarters. The due dates for bills are typically the 1st of August, November, February, and May. Because the city tax rate is not set until the fall, the bills from the first two quarters (due August and November) are estimated based on your previous year’s assessment and what was paid. These are referred to as “preliminary bills.” The preliminary bills calculation is equal to what you paid last year, plus 2 1/2% (Massachusetts Prop 2.5), divided by 2. The last two bills, which come out in January, are then adjusted to reflect your home’s new value and new tax rate (set at the end of the calendar year by the City Council) and will make up any difference from the first two quarters. These are referred to as “actual bills.”
If your property was subdivided and new parcels were created for the Fiscal Year, our procedure is to determine an estimate of value for the purposes of establishing preliminary tax amounts. Again, this is subject to the 1st and 2nd quarters only and will be adjusted for the actual (3rd and 4th quarters) tax bills once the tax rates and values have been set by the City Council and approved by the DOR at the end of the calendar year.
The City offers several partial and full exemptions for Religious and Charitable properties. Full exemptions are based on state-defined lists of use exemptions, including churches, veteran’s lodges, and charities based on conditions. If you believe you may qualify for one of these exemptions, you must submit a 3ABC form by March 1st deadline to the assessor’s office.
We also offer partial to full personal exemptions as tax relief options for qualified homeowners. Personal Exemptions do not lower the assessed values, they are simply tax adjustments. You may qualify for an exemption if you are:
- Over 65 (income and asset limitations apply)
- A veteran with a 10%+ service connected disability
- Legally Blind
- Surviving Parent/Spouse of a disabled/deceased veteran or Police/Firefighter killed in the line of duty
- Minor children of deceased parents
Each exemption has eligibility requirements (e.g., age, income restrictions, ownership restrictions, etc.) except there are no income restrictions on the veterans, blind and surviving spouse/parent/children exemptions. You may not receive more than one personal exemption, however, if you qualify for two or more exemptions, you will receive the exemption that saves you the most money. Exemption applications deadline for filing are due annually by April 1st. Please click on our Personal Exemption and Religious & Charitable Exemption tabs to see more information or contact our office.
For FY24, the tax deferral allows elderly taxpayers (age 65 or older) with annual income of less than $31,105 for a single applicant and $37,902 for a married applicant to defer payment of all or a portion of their property taxes. Income qualifications change annually with Massachusetts State Cost of Living Adjustment. A tax deferral should be considered when an owner's current expenses make continued ownership of their home difficult. A deferral is not an exemption. Instead, the amount of the deferred tax, plus interest accruing at the rate of 4.5% per year, must be repaid when the property is sold or transferred, or when the owner is deceased. A tax deferral represents a lien on the property but may, for some owners, be a viable financial option. Filing deadline for tax deferrals is March 31st.
If you believe the value of your property is incorrect (not if you feel your tax bill is too high), there is a process by which you may apply for an abatement. An abatement application may be filed by the person to whom the property is assessed, or the person who became the owner of the property after January 1. By state law, applications for abatements can only be received during the month of January for the current fiscal year, no abatements can be granted unless the application is filed by the deadline. Per M.G.L, you cannot retroactively file an application for abatement on prior years of property taxes. The assessor’s department then has 3 months to approve or deny your application. The burden is on the aggrieved taxpayer to prove your opinion of value. Supporting documents such as comparable sales that occurred in the relevant time period for that fiscal year and any income and expense information for commercial properties are needed. An interior and exterior inspection of the entire property is also required by the Assessors in order to be granted an abatement.
There are several reasons you may apply for an abatement, including:
- The assessed value is too high based on comparable sales
- The property is improperly classified or exempt from taxation
- There is an unusual situation on the property which would affect its resale value
- There was a computational error on my tax bill
- "tax bills being too high" is not a sufficient reason to grant an abatement. An abatement is only contesting the value of the property!
The Board of Assessors review the required proof of information provided by the property owner and data collected during the inspection to either grant or deny the application. If granted an abatement, it is reflected on your third or fourth quarter tax bill and an abatement certificate is sent in the mail. If denied, we will send a letter informing you of the denial. You may appeal the decision at the Appellate Tax Board if you feel the decision is not satisfactory to your opinion of value.
Abatement applications do not stay the collection of your taxes. Interest and fees may be added to your tax bills if they are not paid by the due dates.
Frequently Asked Questions
My third and/or fourth quarter is more than my first two quarter bills. Why did it change?
The first two quarter bills are estimated based on your previous year’s assessment. If this estimation was too low, the additional amount required to make up your yearly tax total will be added to the third and fourth quarter bills. Also, If you recently purchased a home from an individual who received a personal exemption in the prior fiscal year, your closing attorney should inform you of the potentially significant increase for the 3rd and 4th quarters that make up the difference now that the personal exemption is no longer applicable.
Why was someone from the assessor’s office taking pictures of my house?
Our database includes pictures of every property in order to maintain accurate records. Our office always strives to be polite and unobtrusive. If our presence on your property is unwelcome, please feel free to kindly let us know an our assessors will kindly oblige.
Why did my assessment change at a different percentage than the assessment of other houses?
The City of Salem is an increasingly popular place to live, and as such property values are moving up year to year. There are trends in the market which means certain types of houses may be selling at higher values than others. The assessors compare property sales in the same land use (single family, two family, condo, apartment building, commercial complex, etc.) when determining whether to raise or lower assessments “comparing apples to apples”. Furthermore, your house style, neighborhood or street you live on may be in high demand. Market value changes occur in many forms. Buyers have different requirements and market desirability trends sometimes change from year to year. Also, potential renovations may have been performed on a property that would cause a change in assessed value different from a similar property that did not undergo renovations or estimations were used by the assessor to determine the work completion. A recent inspection by the assessor's office may also have contributed to a change in assessed value be it an increase or decrease. Perhaps the property had not been inspected in several years and the property information has now been updated to more accurately reflect the condition of the property. All of these things can affect your value in a given year.
My property card says that my house is a 2 bedroom when really it has 3 bedrooms. Can you fix this?
We follow specific guidelines that determine whether something is considered a bedroom. If you believe there is an error regarding bedrooms or any other specific features of your house, please contact our office to schedule an inspection. No changes will be made without the assessors physically inspecting the entire property.
What does my assessment represent?
The assessment is an estimate of market value. The definition of market value is the price a willing buyer would pay a willing seller in an open, competitive market, without any undue influences (no foreclosed sales, estate sales, kin sales, etc.). The assessment represents the estimate of market value as of January 1 for the following Fiscal Year.
As an example, January 1 2022 is the assessment date for Fiscal Year 2023. This estimate of market value is determined by examining sales of properties from calendar year 2021.
Although the majority of properties are not for sale, Massachusetts General Laws requires an assessment, or an estimate of market value, on every property. Sales of similar or comparable properties within a neighborhood are the best indicator of market value.
My neighbor does not allow access to inspect their property and I have. Am I being penalized? Will my value increase after?
By law, you do not have to allow the assessors into your home. We only request the inspections in order to be as fair and accurate as possible. However, if an assessor is denied entrance, property owners give up their ability to challenge the assessed value with an abatement. It is impossible to question an assessment if a property owner refuses to allow the assessors a view of the entire property. In instances where the assessors do not get into a property, estimates are made about the condition of the interior of the property, the kitchen and bath qualities, and whether there is finished attic and/or basement space.
Accurate assessments are based on accurate information. By allowing the assessors to inspect the interior and exterior of your property, you’ll know your assessed value is based on the actual fair information that is present at the property. The inspections do not automatically mean your assessed value will go up, your assessment could possibly go down both based on the any data changes to your property.
Attempts are made by letters mailed and by knocking on doors (we do not house telephone numbers). No response is considered a refusal and could result in a denial of an assessment appeal. If the estimates are overstated, property owners may contact the assessor's office to arrange an interior and exterior inspection of their property.
Why did my assessed value increase when I did not make any changes and I am not selling the property?
The assessed value represents the estimate of market value of the property during a snapshot of time. Assessors use the prior calendar year’s sales data to determine the current fiscal year’s assessments. The real estate market changes constantly and the assessments change based upon these changes. Although there may not have been any physical changes to the property, buyers may be paying more or less for properties than they were in previous years. The assessment changes reflect the changes in the purchase prices of similar properties in the neighborhood. The assessments do not predict market value. The assessments therefore reflect (or report) market value. The real estate market can change dramatically from year to year. It is not limited to 1, 5, 10 or 25-year intervals. The buyers and sellers determine the market value of properties. The assessments reflect what the arms-length (person to person not under duress or foreclosed/estate/family sales) transactions are doing as of the assessment date.
My assessment increased 20%. Does that mean my tax payments will increase 20%?
The valuation change is not solely indicative of the tax change. There are two components that help determine the tax rate. The first is the budgetary requirements voted on by the City Council to run the city. The second is the overall value of the property within the town. For example, if the budget increases 5%, then the tax increase throughout the city would be approximately 5%, regardless of what happened to the overall assessed values. For example, if the budget increased 5% and all the assessments in the town went up 20%, the average tax increase would still be 5%. The tax rate, which is calculated by dividing the amount to be raised per share of class (Residential/Commercial/Industrial/Personal Property) by the total assessed values of that class then multiplied by 1,000, would decrease approximately 15%. In another example, if the budget increased 5% and all the assessments went down 20%, the average tax increase would still be 5%. The tax rate, which is calculated simply by dividing the budget by the value of property, would increase approximately 25%.
Typically, the home is the single largest investment most people make. The assessment reflects the market value of this asset. People often associate rising assessments with rising taxes. However, this is not the case. Rising budgets cause rising taxes. If the budget increases, typically taxes increase, conversely, if the budget decreases, typically taxes decrease. The assessed value represents the market value of the property. If all the assessments went down 25% and the budget increased, taxes would still increase. The budget is the driving force behind rising taxes. If the assessed value of a property increases, this generally increases the property owner's equity in the property. Although many property owners are not selling their homes, an increased asset value is usually received as welcome news. Most people understand tax increases are not caused by assessment increases but by increased city spending.
Why is the previous owner's name still appearing on the tax bill?
According to Massachusetts General Law, Chapter 59 section 11, the official real estate taxpayer (taxpayer of record) for any tax year (fiscal year) is the owner on January 1 of the calendar year that the tax year (fiscal year) begins. The taxpayer of record does not change over the course of that tax year (fiscal year), even if the property changes hands during that time. Although the tax bill will bear the name of the assessed owner (taxpayer of record/previous owner) as of January 1, the new owner is responsible for all taxes once the sale of the property is finalized. The tax bills can be mailed in care of the new owner at the same or a different address as long as the Assessing Department is notified by the new owner in writing. If the new owner notifies the office of the Assessors of the change, the subsequent bills will then be addressed to prior owner in care of new owner. As a rule, this issue is discussed in detail at the closing and sale of the property since an error could result late payments, interest and fees and a possible lien against the property. Former owners who receive a tax bill after the sale of their property are requested to forward the bill to the new owner, however this is voluntary. The new owner(s) is/are ultimately and legally responsible for procuring their property tax bill and paying the taxes once the sale is concluded regardless of receipt of a tax bill.
If I recently changed my last name or a co-owner passed away, can you make the reflected change on my tax bill?
A marriage certificate or death certificate should be recorded at the Registry of Deeds. It is not necessary for a new deed to be recorded. Under Chapter 59 Section 11, the assessors rely on recorded instruments at the Registry of Deeds and the Registry of Probate. A petition for a name change can be filed in the Probate Court.
What if my property is held in a Life Estate, who is considered the owner?
The creation of a life estate separates the present title and interest from the future title and interest. It divides ownership of the property in a time. A life tenant is considered the owner of the property during their lifetime for the purposes of assessing property taxes under M.G.L chapter 59, section 11.
What happens if I did not receive my tax bill?
Under state law, failure to receive a bill does not affect the validity of the tax or any interest or fines incurred due to late payment(s). It is the responsibility of the taxpayer to secure his/her tax bill when one is not received. M.G.L Chapter 60, section 3 states: “An omission to send a notice under this section shall not affect the validity either of a tax or of the proceedings for its collection.”
If your taxes are escrowed by a bank or mortgage company, you will want to ensure that they make timely payments. Most banks and mortgage companies subscribe to a tax service that will notify them directly of the amount they need to pay for your taxes. However, if you have recently purchased, refinanced, or have a mortgage company that does not subscribe to a tax service, it will be up to you to notify them.
Do you keep a list of abandoned or foreclosed properties?
The Assessing Department does not keep a list of foreclosed or abandoned properties, however mortgagees are required by City Zoning Ordinance (Chapter 12, Article II, Division 3) to register foreclosed properties with the Building Department. Regulating the maintenance of abandoned & foreclosed residential and commercial properties article
For more tax bill (which are issued quarterly) information and payment options, please visit the City of Salem Collector’s website.
Change of address forms are required in writing by the “deeded” owner of a property to the Assessors Office in order to adjust the mailing address of a property.