Time to write a check for your 2011 Cambridge real estate taxes

Cambridge Property Tax Rate – 2011  Cambridge announces its new real estate tax rates earlier than many nearby towns and cities. 

The rates for FY 2011 are already out and the first of two property tax bills is due on November 22, 2010.

Cambridge Property Tax Rate – 2011

For 2011 the residential property tax rate in Cambridge is $8.16 per $1,000.  Though it’s an increase over last year’s rate of $7.72 Cambridge property taxes remain quite low compared to other Massachusetts towns and cities.

The value of the residential exemption in FY 2011 is $1,601.20.

Cambridge real estate taxes are paid in two installments.  The first property tax payment is due by November 22, 2010.  The second half will be due in May 2011.

More information about residential real estate taxes in Cambridge can be found on the city website.

The details of the credit are fairly complicated  and you’ll need to factor in the dates of your purchase relative to the enactment of the legislation. Consult your accountant or tax practitioner to determine your eligibility for the credit.

Here are some highlights of the new bill:

Who Is Eligible For A Homebuyer Tax Credit?

• A buyer qualifies as a first time home buyer if he or she has not owned a home in the three years prior to the purchase
• Homeowners buying a home who have used their previous home as a primary residence consecutively for five of the previous eight years

How Much Is The New Credit?

• First-time buyers – $8000 or $4000 married filing separately
• Current homeowner – $6500 or $3250 married filing separately

When Does The New Homebuyer Credit Expire?

• Buyer must have a written binding contract to purchase in place by April 30, 2010
• The homebuyer has until July 1, 2010 to close

Is There A Home Purchase Price Limit For The Credit?

• Yes. The home purchase price is now capped at $800,000. 

What Are the Income Limits For The Home Buyer Credit?

The income limits have been increased with the new credit.  Previous income limits are in parentheses.

• $125,000 single ($75,000)
• $225,000 married ($150,000)
• Additional $20,000 phase out

 Low interest rates, a tax credit, and lower prices – it’s good to be a buyer right now.  Looks like the spring real estate market will start early this year!

Typically a lack of property tax information means that this is a new condo – either a newly built condominium or an existing building – often a multi-family - that’s in the process of being split up and converted to condos.

In the case of an existing building sometimes the listing will show a number that seems too high - much more than you expect to see for annual taxes for a condo in this price range. That may be because the agent has put the tax bill for the entire building in the field.  However, as a condo owner you’re only going to be responsible for taxes on your unit – not on the whole building.

When an existing multi-unit building is converted to condos there is typically some lag time before the town or city Assessor assesses the individual condos.  Until then your tax bill will be your portion of the bill on the entire building.  Your condo’s percentage of ownership is defined in the condo documents. 

Let’s say you bought a condo in a triple-decker that’s just been converted to condos. If the units are all the same size your ownership percentage is probably 33.3% – so you would be responsible for one-third of the building’s tax bill until the city recalculates the taxes by unit.

You’ll want to talk to your new neighbors in your building to find out how the tax payment should be handled.  Perhaps one person will collect everyone’s checks.  Often your lender is collecting money from you each month in an escrow account that will cover your taxes.  You want to make sure that your bank only pays your portion – not the whole building’s.

The City of Somerville website has a really good page about taxes for new condos. While much of the information is specific to Somerville, there’s also a good description of what happens tax-wise when new condos are created.

Wondering what your taxes are likely to run? To get a rough idea you can look at the taxes on condos that are assessed for amounts close to the purchase price of your condo.  Or check the city or town’s property tax rates and multiply by the sales price of your condo to get an estimate.

Have more questions about your real estate search? Email me or call me at 617-504-1737 – I’m happy to help!

What’s the Value of the Residential Exemption?

For Cambridge homeowners who qualify for the 2010 residential exemption, $198,423 is deducted from the property assessment.  This amounts to a reduction in the 2010 tax bill of $1,531.83.

Here’s more information about the residential exemption in Cambridge.

For Watertown residents, for the 2009 tax year, the 2009 residential exemption reduces the assessed value of the homeowner’s property by $88,733, which translates to a savings of $1,086 for qualifying Watertown homeowners.  The value of the exemption in 2008 was $1,063.

The Somerville residential exemption for 2010 reduces the assessed value of a qualifying homeowner’s residence by $138,011 resulting in a tax savings of $1,697.54.  The application form for the exemption is online and questions should be directed to the Assessor’s office at 617-625-6600 ext. 3100.