Difference between revisions of "Local Politics:Issues:Understanding Your Tax Bill"

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Residential taxes vary each year due to several factors:
Residential taxes vary each year due to several factors:
* New construction, addition or renovation: tax goes up proportionally to the assessed value of the addition. The increase in assessment due to new construction is not reported separately on the tax bill, but may be roughly inferred as follows:
* New construction, addition or renovation: tax goes up proportionally to the assessed value of the addition. The increase in assessment due to new construction is not reported separately on the tax bill, but may be roughly inferred as follows:
** Compare the your assessment on Jan 1st with that of the previous year.
** Compare the your assessment on Jan 1st of the current year with that of the previous year. The assessment is reported in the tax bill for the January of the year that follows, and may also be found online in the [[http://data.visionappraisal.com/LexingtonMA/DEFAULT.asp Assessors Online Database]].
** In the [http://lexingtonma.gov/finance/assessor.cfm Board of Assessors] Tax Classification Packet, released in December of the current year, compare the aggregate Lexington residential value with that of the previous year.
* Loss of residence due to fire or other calamity
* Loss of residence due to fire or other calamity


Revision as of 12:24, 8 December 2013

Lexington residents get real estate tax bills four times a year, and excise tax bills for other property (automobiles, trailers, etc).

The Real Estate Tax Bill

Residential real estate tax bills are mailed quarterly. Residences are assessed at their fair marker value on Jan 1st, the fiscal year begins July 1st, and the tax rate is set by the Board of Selectmen in December of the same year.

  • The first two real estate tax bills mailed in July and Oct represent preliminary estimates (since the tax rate is not known until December).
  • The last two tax bills, mailed in Jan and April, are different in that they:
    • List the assessed value and the tax rate at the top left
    • Are computed so the total of the four tax bills equals the assessed value times the tax rate[1].

The tax bill includes a Community Preservation Act surcharge, which is up to 3%[2].

Factors causing increase or decrease in yearly tax bill

Residential taxes vary each year due to several factors:

  • New construction, addition or renovation: tax goes up proportionally to the assessed value of the addition. The increase in assessment due to new construction is not reported separately on the tax bill, but may be roughly inferred as follows:
    • Compare the your assessment on Jan 1st of the current year with that of the previous year. The assessment is reported in the tax bill for the January of the year that follows, and may also be found online in the [Assessors Online Database].
    • In the Board of Assessors Tax Classification Packet, released in December of the current year, compare the aggregate Lexington residential value with that of the previous year.
  • Loss of residence due to fire or other calamity

Federal Tax Deduction of the Real Estate Tax

Real estate taxes, including the CPA surcharge, are deductible on the federal income tax, provided deductions are itemized[3]. The real estate tax deduction is not allowed when calculating the AMT[4].

References

The Excise Tax Bill

Excise tax bills are mailed once a year, in Spring. A separate tax stub is mailed by the Lexington Collector of Taxes for each motor vehicle customarily kept in Lexington[5], unless the vehicle is exempted from excise tax [6].

Excise taxes are in lieu of local property tax. The excise tax rate is set by the state[7]. Valuation is computed by the Registry of Motor Vehicles[8], but may be abated by the Lexington Board of Assessors[8]. Payment is made to the Town of Lexington.

Federal Tax Deduction of the Excise Tax

The excise tax is deductible on the federal income tax, provided deductions are itemized[9]. The excise tax deduction is not allowed when calculating the AMT[4].

References

Notes

  1. ↑ Plus CPA surcharge, and adjusted by exemptions and deferrals.
  2. ↑ See the Community Preservation Committee homepage (last accessed Dec 7, 2013). Lexington has adopted the Community Preservation Act (CPA) on March 6, 2006. The Commonwealth matches a portion of the CPA surcharge, but the amount changes each year.
  3. ↑ IRS Publication 530 (2012). See section on Real Estate Taxes.
  4. ↑ 4.0 4.1 Alternative Minimum Tax: Common Questions, TurboTax Instructions (last accessed Dec 8, 2013): "In calculating the AMT, you cannot take itemized deductions for state and local income tax, real estate taxes and personal property taxes, even though these are deductible on your regular return."
  5. ↑ Motor Vehicle & Trailer Excise Tax Manual, Place of Assessment
  6. ↑ Motor Vehicle & Trailer Excise Tax Manual, Exemptions.
  7. ↑ Motor Vehicle & Trailer Excise Tax Manual, Calculation of the Excise Amount.
  8. ↑ 8.0 8.1 Motor Vehicle & Trailer Excise Tax Manual, Role of the Registry of Motor Vehicles in administration of the motor vehicle excise.
  9. ↑ Boston.com: Is vehicle excise tax a proper write-off for itemized tax deduction? (last accessed Dec 8, 2013)


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