By:Kimberly Phillips, Journal
Inquirer
06/29/2006
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Those
who own more expensive homes, however, will see smaller increases - or even pay
less in taxes - because their property values have not gone up as much.
"The results are really pretty staggering," town Assessor and Tax
Collector John Rainaldi said Tuesday. "We would
need an absolute catastrophic failure of the real estate market, which we don't
want," to avoid these increases.
During a presentation before the Board of Directors, Rainaldi
and Town Manager Scott Shanley cited sales data on 14
properties in town, including single-family, multifamily, condominium, and
commercial units, that show revaluation will hit many
taxpayers hard.
As predicted, they said, the tax burden will shift from commercial property
owners to homeowners, and within that shift people who own less-expensive homes
will see higher percentage increases in taxes than those who own pricier homes.
For example, an 1,116-square-foot Cape Cod-style home
with two bedrooms and one bathroom that was built in 1950 on a 0.23-acre lot
had paid $2,724 in taxes based on its value from 2000, that last time the town
underwent a revaluation, the town's example shows.
After the revaluation this year, taxes are estimated to increase to between
$2,940 and $3,190, 8 to 17 percent, because the property's value went up 60
percent compared to 2000.
Meanwhile, the owner of a 3,615-square-foot contemporary home with three
bedrooms and 2.5 bathrooms that was built in 1985 on about an acre was paying
$7,983 in taxes, the example says. After revaluation that's expected to drop to
between $6,880 and $7,470, a decrease of between 6 and 15 percent, because the
value of the property went up 28 percent.
The examples are part of a presentation town staff is preparing to make to
organizations throughout town to educate residents on what's going to happen
when the Oct. 1 grand list is finalized.
Homeowners will receive revaluation notices for their properties in November, Shanley and Rainaldi said. The
first tax bills reflecting those new values will come due in July 2007. There
is an appeal process that will begin early next year.
Actual tax payments, which now are only estimated on the 14 properties, will
depend on the exact amount of growth in the grand list and the resulting tax
rate.
It's expected that the general fund tax rate will drop from the current 35.51
mills to about 27.5 mills, Shanley said, without
taking into account any increase in spending. This does not include the tax
rate for either of the two fire districts.
If the general fund tax rate drops, taxpayers who owe motor vehicle taxes will
see a decrease in their bills.
A revaluation of property is conducted every five years to rid the real estate
market of inequities, Rainaldi and Shanley explained. Certain parcels appreciate, while other
depreciate or fail to grow at the same rate as others, shifting the tax burden.
Rainaldi said the average appreciation rate for
residential properties with a 2000 market value of less than $49,900 is 143.25
percent. Those with a 2000 market value of between $50,000 and $99,900 have an
average appreciation of about 88 percent, those between $100,000 and $149,900
about 71 percent, between $150,000 and $199,900 about 62 percent, between
$200,000 and $249,900 about 47 percent, and more than $250,000 about 36
percent.
This means a small two-bedroom, one-bathroom home with 872 square feet on 0.13
of an acre would pay between $444 and $664 more in taxes after the revaluation,
between 22 and 32 percent more, according to the town's example. The home has
appreciated 80 percent in six years.
The owner of a condominium with one bedroom and one bathroom in 745 square feet
likely would pay between $483 and $593, between 67 and 83 percent, more after
the revaluation, the town's example shows, thanks to a 150 percent appreciation
rate.
Multifamily homes will be hit the hardest, however, according to the town's
examples. A four-family home with 3,766 square feet on 0.2 of an acre would pay
between $2,798 and $3,308 more after revaluation, 88 to 104 percent, because of
a 178 percent appreciation rate.
Commercial properties, while they're going up in value, aren't appreciating as
much as homes, therefore taxes on these sites likely will drop.
A garage/office building with three automotive bays in 4,168 square feet would
see its taxes decrease between $932 and $1,352, 15 to 21 percent, even though
it appreciated 17 percent.
Rainaldi and Shanley noted
that the tax burden shift is going to hurt those on fixed incomes, since they
often live in smaller, less-expensive homes, and those who pay rent, as
multifamily properties have appreciated dramatically resulting in higher taxes
and, eventually, higher rents.
"It's not fair," Shanley said, emphasizing
that value changes in properties happen exclusive of political decisions in
town. "People will look at it and say it's not fair."
What's positive, he said, is people's real estate investments have generated
huge profits if they were to sell. Nevertheless, those who simply can't afford
the tax increase have told him they'll have to move out of
"That's sad," Shanley said. "But
what's even sadder is, where in the state of
At least 45 other municipalities in the state are undergoing property
revaluations this year and are reporting similar results, he said.
Local groups who would like a presentation on the revaluation this summer or
fall are encouraged to call Shanley's office at
647-3123 or Rainaldi's office at 647-3016.