Why is my tax bill so high?

By Nick Grabbe

Amherst homeowners have until Feb. 1 to pay their typically hefty property tax bills. These bills are the heftiest yet, and I’ll try to explain why in simple, easy-to-understand terms. Don’t be late in paying these bills; interest at an annual rate of 14 percent starts adding up on Feb. 2.

Q. If the fiscal year runs from July 1 to June 30, why are these quarterly bills higher than the ones that were due on Aug. 1 and Nov. 1?

A. Those earlier bills were estimates of your annual tax obligation, based on the previous fiscal year’s values and a projection of the tax rate. The new values and the actual tax rate were not set and certified until December, a lag that happens every year. So most of the annual increase in your taxes must be paid in the bills due Feb. 1 and May 1.

Q. How much are my annual taxes going up?

A. It depends on the assessed value of your property, but the average single-family home’s annual tax bill is going up from $8,194 last year to $8,609 this year.

Q. What’s the math behind those numbers?

A. The average assessed value of a single-family home in Amherst in the previous fiscal year was $375,507 and the tax rate was $21.82 per $1,000. This year’s average value is $404,763 and the tax rate is $21.27. Tax rates usually decrease when the average property value increases.

Q. That’s an increase of 5 percent in the average annual tax bill. I thought taxes couldn’t go up by more than 2.5 percent under state law.

A. State law does limit the amount a town can raise in taxes to 2.5 percent, but allows it to further increase by the amount of taxes raised by “new growth.” The extra wrinkle this year is that residential values have been rising more than commercial values, partly because of the pandemic, so a larger share of the tax burden is now borne by homeowners.

Q. Yes, I’ve heard that the real estate market went crazy last spring, with sale prices often higher than asking prices, with multiple buyers bidding prices up and houses. Have things stabilized a bit?

A. A bit. Asking prices have been very similar to sale prices lately, said Finance Director Sean Mangano. Last spring, sale prices of single-family houses were averaging about $500,000, or 28 percent above their assessed values. The last few months, the average sale price has gone down, but it’s still above $450,000, and about 20 percent above assessed values. All single-family sale prices in the past 10 months are listed in “Recent House Sales” in the main menu of this blog.

Q. Are condominium prices increasing as fast as single-family houses?

A. Yes. The average condo is on the market for only two to three days before it’s sold, Mangano said.

Q. I heard that Amherst’s taxes are twice what they are in Hadley. Is that true?

A. Almost. The average residential tax in Hadley this year is $4,467, and the tax rate is only $12.18 per $1,000. Because of a much bigger commercial sector, Hadley homeowners bear a much smaller percentage of the tax burden than in Amherst. In addition, Hadley chose to give homeowners a break this year by establishing a higher tax rate for commercial property than residential property.

Q. Northampton is more similar to Amherst than Hadley is. What are its taxes like?

A. The average residential tax bill in Northampton this year is $6,303, which is an 8.6 percent increase over last year. Northampton, though it doesn’t have a commercial sector like Hadley’s, has a significantly bigger one than Amherst, so the business sector absorbs a greater share of the tax burden.

Q. Why are taxes in Amherst so high?

A. There are three main reasons. First, a large percentage of our land is exempt from property taxes, chiefly because of campuses but also because of conservation areas and farmland that can’t be developed. Second, we have high expectations for municipal services; for example, we have a low teacher-student ratio in our schools, and we believe in paying our public employees well. Third, because of our very small commercial sector, residents are responsible for 90 percent of the property taxes that Amherst collects.

Q. How does Amherst’s average residential tax bill compare with other Massachusetts cities and towns?

A. In recent years, we have ranked about 55th among the 351 cities and towns. The average property tax bill in Massachusetts in fiscal 2021 was $6,374. The only town in the Pioneer Valley with higher property taxes than Amherst is Longmeadow ($9,388).

Q. Why are assessed values lower than sale prices?

A. In a hot market like Amherst’s, it’s difficult for assessments to keep up with changes. The schedule for re-assessing property also contributes to the lag. Some properties are re-assessed ahead of that schedule, because a sale has established their values, or a homeowner has taken out a building permit, or a property hasn’t been inspected in some time.

Q. If I have a higher assessment, is that what causes my taxes to go up?

A. No. Assessments merely redistribute the tax burden based on the actual market. Assessments and the tax rate operate like a seesaw; when one goes up, the other typically goes down. But annual tax bills on a property rarely go down, because the amount of money the Town must raise always goes up. An assessed value might decrease if a house is damaged, as in a fire.

Q. Are property assessments going to be increased to more accurately reflect sale prices?

A. Yes. Town officials are required under state law to do a total revaluation in the fiscal year starting July 1. Increases could be across the board, or higher in some neighborhoods or styles of housing. While assessments will increase, the tax rate will likely continue to decline.

Q. How can I find out my assessed value?

A. In the middle of the top of your tax bill, it’s listed under “Total Taxable Valuation.” You can find the valuation for any address by going to amherstma.gov, clicking on Departments, then Assessor, then Online Data Base, then entering the address.

Q. I don’t want to go to Town Hall to pay my taxes because of the pandemic. What should I do?

A. If you don’t want to mail your payment, there’s a secure drop box on the Main Street side of Town Hall. You can’t pay your taxes over the telephone.

Q. Can I pay my tax bill online? Can I arrange for my taxes to be automatically taken out of my bank account?

A. Yes. The information on how to do this is included in a fact sheet that came with your tax bill.

Thanks to Town Councilor Andy Steinberg, Finance Director Sean Mangano and Principal Assessor Kimberly Mew for contributing to these answers.