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Clarence Fanto: Many year-rounders face an increasing property tax burden. Here’s what could help

Housing Market

A state law could provide real estate tax discounts for full-time local residents, but so far no Western Massachusetts towns have adopted the exemption. 

Second of two parts.

LENOX — A state law on the books for 42 years that offers a real estate tax discount for full-time local residents has never found any takers in Western Massachusetts.

Currently, only 16 of the state’s 351 cities and towns have adopted the residential tax exemption. Whether that will change this year will depend on vigorous debates in some of our communities.

Property tax spikes countywide caused by rising municipal budgets and sharply higher real estate values are causing financial woes, especially for residents living on fixed incomes.

Marybeth Mitts, who chairs the Lenox Select Board, has urged members to examine a possible residential tax exemption for the 2023 fiscal year that begins this July 1. Requiring annual approval by a select board or a city council, the discount reduces tax bills for lower-valued homes, though the tax burden would increase for more expensive properties, second-homers, owners of rental properties and the commercial sector.

The potential tax break is worth exploring "for the folks who want to live out their golden years in their homes," she said. "Their incomes aren't increasing, so we need to figure out a way to mitigate that."

The discount exempts a portion of a home’s assessed value by anywhere from 10 to 35 percent, depending on a local town government decision. It’s only available to legal residents living in a town more than six months each year.

Carole Owens, Eagle columnist, Stockbridge historian and founder of the biweekly Stockbridge Updates online newsletter, calls the exemption a matter of “sensitivity and caring, livability, community and neighborliness. … It is a way to make any town or village that adopts it more affordable for those with lower incomes, elderly on fixed incomes, and owners of the lesser or least expensive homes. It eases the tax burden on those who need relief the most.”

With “rising pressure on our real estate market,” Owens has asserted, “it may help South County towns maintain moderate-cost housing and not become enclaves of exclusively high-priced housing.”

Skeptics mention the unfairness of imposing a greater tax burden on second-home owners and on those who own more expensive homes in a town, even if they are full-timers. If a town adopts an exemption, it must raise its tax rate in order to collect the total revenue needed to maintain services.

Exemption opponent Chip Elitzer, a financial consultant and Great Barrington resident, told me: “The best way to reduce taxes for all Great Barrington taxpayers would be to grow our tax base by encouraging the building of more second homes and more expensive homes. Raising taxes for those categories through the residential exemption would have the opposite effect.”

As attorney Michael Wise has clarified, “Depending on the value of your house, your taxes are now lower (for less expensive homes) or higher (for more expensive homes). When you lower the taxes for one class of taxpayers, you must raise the taxes for other classes. The money has to come from somewhere.”

Wise, the town moderator in Great Barrington, points out that “the people who don’t like it because they’re going to pay more get organized and show up at meetings. The people who would benefit are busy working two jobs and don’t come to the meetings.”

As for the discount’s impact on a community, he says that “it depends on what kind of development you want. This reduces the cost of modest-sized housing. If that’s the kind of growth you want to encourage, this encourages it.”

Stockbridge Selectman Patrick White notes that a majority of the houses there are owned by part-time residents. They pay 60 percent or more of the town’s real estate tax revenue.

White has acknowledged that “they are an important part of our community, but a town also needs a robust year-round community that includes a diverse mix of folks: young families and seniors, working class and wealthy. … One option we have to invest in our communities is to make homes a little more affordable for young people and for old people. This can play a part in mitigating the market distortions we are seeing due to the influx of second-home owners and short-term rental investors.”

In his view, “this is about workforce housing, about making our community affordable to people who live and work here.”

His motion last month to adopt the residential exemption failed to win a second from his two Select Board colleagues, meaning it’s off the table in Stockbridge, at least for now. But the debate is bound to continue.

White believes that the discount would level the playing field, and he denies that it’s “a soak-the-rich scheme. This is about defending the sense of community we have and ensuring that folks of diverse resources, and folks who work for a living, can afford to raise their children in this community as they’ve done for hundreds of years.”

Other options are worth exploring, such as the state’s senior property tax deferral program, allowing people 65 or over to defer their property taxes until their home is sold or, when they pass away, conveyed to heirs. At that time, taxes and interest will be due, unless a surviving spouse enters a new deferral agreement.

As the state’s website notes, “a deferral allows seniors to use resources that would go to pay taxes to defray living expenses instead.”

For residents who are retired or who earn typical Berkshire paychecks, coping with rising property taxes becomes a potentially insurmountable challenge.

Material from Stockbridge Updates and the Berkshire Edge was included in this commentary. Clarence Fanto can be reached at cfanto@yahoo.com. The opinions expressed by columnists do not necessarily reflect the views of The Berkshire Eagle.

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