Exemptions

What is an exemption in the context of real estate? An exemption is a release of the duty to pay some or all taxes assessed on a parcel of property. There are several different categories of exemptions, but each category has its own requirements that must be met in order to qualify for an exemption. A board reviews applications for exemptions and votes on the applications submitted to approve or deny them. You will need to establish your residency and property ownership in order to be considered for a tax exemption. If you need advice on this type of issue or a similar matter in the Boston area, you can consult the real estate attorneys at Pulgini & Norton.

Under Massachusetts General Laws Chapter 59, Section 5, cities and towns can give property tax exemptions to certain individuals that qualify. The exemption will release a taxpayer from the obligation to pay some or all of a tax. Exemptions are offered in different cities in Massachusetts based on your status as an elderly or senior person, a surviving spouse or surviving minor, a blind individual, or a disabled veteran.

In Boston, for example, there is a residential exemption for property serving as the owner's principal residence from the January 1st preceding the fiscal year of your application. Fiscal years run from July 1 to June 30. The principal residence is the one from which you file your state income tax return. Since it involves a "principal" residence, an individual can qualify for a residential exemption with regard to only one parcel of real estate. The "exemption" is the dollar value of the property that is exempt from being taxed. In other words, part of your property value will be exempt from being taxed. For example, if the residential exemption value is $100,000, a home with an assessed value of $350,000 will be taxed on $250,000 of its value. This is multiplied by the residential tax rate for the current dollar savings amount.

The residential exemption appears on the third quarter tax bill for a fiscal year. If you do not receive such a credit, you will need to file an application for the exemption with the assessing department by April 1 of the tax year for which you are claiming the exemption. This form can also be accessed online using identifying information.

Although you can only qualify for one residential exemption, you may also be entitled to other personal exemptions related to your real estate. However, in Boston, no real estate parcel is permitted to be assessed for under 10% of its fair cash value, except under certain circumstances involving financial hardship and physical infirmities.

In addition to tax exemptions, there is also a Massachusetts homestead exemption that protects equity in your home under bankruptcy law. This exemption allows you to protect $125,000 in your primary personal residence automatically, if you need to file for bankruptcy. This amount is increased to $500,000 for homeowners who sign a recorded declaration to take advantage of the full exemption and for disabled and elderly homeowners. The rules around the Massachusetts bankruptcy exemptions can be complicated, however.

There may be a lot of financial consequences involved in residential purchases or other property transactions in Boston and the surrounding communities. Our lawyers can help you evaluate whether or not owning a particular piece of real estate is affordable over the long term. We represent clients throughout Massachusetts, including in Somerville, Cambridge, and Medford. Call us at 781-843-2200 or contact us via our online form for a consultation.