The fiscal year for local real estate taxes in Massachusetts begins on July 1 and ends on June 30 of the following calendar year. For each fiscal year, real property is assessed as of January 1 of the preceding calendar year. For Fiscal Year 2010 (July 1, 2009 – June 30, 2010), January 1, 2009 is the date on which real estate values are established. The assessed values for January 1, 2009 are derived from market data for calendar year 2008.
This is significant for retail real estate owners, developers and investors. Calendar year 2008 marked the beginning of the retail real estate market’s current downturn with the bankruptcy of a number of prominent retailers (Linens ‘N Things, Circuit City and Mattress Discounters) and several other retailers closing stores across the country (Ann Taylor, Starbucks and Yum Brands). These depressed market conditions caused capitalization of income rates to jump substantially for retail real estate assets which in turn caused property values to drop significantly. Retail real estate stakeholders should have very persuasive arguments to make to local assessing departments in the event their properties are over assessed.
A real estate tax abatement application must be filed with the local board of assessors on or before the due date for the payment of the first installment of the actual tax bill . The face of the tax bill should indicate the due date for payment and the filing of an application for abatement. For municipalities that use a quarterly billing system, the final date for filing a tax abatement application for Fiscal Year 2010 will most likely be February 1, 2010. In communities that use a semi annual billing system, the due date is generally thirty (30) days from the mailing of the actual tax bill. A tax abatement application that is not received by the local board of assessors on or before the applicable deadline will be denied by operation of law.
Taxpayers must pay their actual real estate tax bill on time in order to preserve their right of appeal to the Commonwealth of Massachusetts Appellate Tax Board (“ATB”). A tax abatement application must be filed on a form approved by the Massachusetts Department of Revenue which should be made available by the local board of assessors. After the tax abatement application is filed, the local board of assessors may request information reasonably required to determine the value of the property, including information relating to income generated at the property and property expenses. A taxpayer may lose its right to appeal an abatement decision to the ATB if it does not comply with the information request within the applicable time period.
Once a tax abatement application is received, the local board of assessors have three (3) months in which to grant, deny, or take no action on the abatement application. The application is deemed denied if the local board of assessors does not act within the three (3) month time period. If the taxpayer is dissatisfied with the decision or non-action of the local board of assessors, then an appeal may be filed with the ATB. A petition to the ATB must be filed within three (3) months of the date of the board of assessors’ decision or failure to act.
By obtaining real estate tax abatements for Fiscal Year 2010, retail owners, developers and investors should have a very good opportunity to achieve substantial savings. In this challenging real estate market where tenant vacancies are common, owners, developers and investors can no longer pass all real estate taxes through to tenants. Given the potential savings, start now on your tax abatement preparations.