Classes of Property

The first step in implementing the Classification Act is to assign each property to the appropriate class. Assessors in Massachusetts must assign all real property in the city or town according to its use: residential, open space, commercial, or industrial. Personal Property constitutes a separate class and is taxed under the commercial rate.

Each parcel must always be assessed at full and fair cash value.

Class One - Residential

Includes all property containing one or more units for human habitation. The class includes accessory land and buildings such as swimming pools, tennis courts, garages and sheds. Single-family homes are in this class, as are large apartment buildings.

Class Two - Open Space

Includes land maintained in an open or natural condition, which contributes significantly to the benefit and enjoyment of the public. Such land cannot be held for the production of income and may be required to meet additional qualifying factors established by the Board of Assessors.

Class Three - Commercial

Includes any property held for the purpose of conducting a business, such as office buildings, retail stores, etc. Personal property also falls within the category of the Commercial class.

Class Four - Industrial

Includes any property involved in manufacturing or processing. It also includes real property used for storage, transmission, and generation of utilities regulated by the Department of Public Utilities.

Classification

In 1978, the citizen's of the Commonwealth of Massachusetts adopted a constitutional amendment authorizing the General Court to classify real property into as many as four classes and to tax such classes differently. In 1979, the General Court adopted an act, which implemented the desires of the citizens. The act enjoyed popular support as a means to prevent the shifting of taxes from business property onto residential property as a result of court-ordered revaluation's.

Classification does not raise additional dollars from the property tax. Preferential tax treatment for residential property is not required but is, rather, a local option.

Commissioner of Revenue

The Commissioner of Revenue supervises the implementation of property classification. After the Commissioner has determined that a city or town's assessed values represent full and fair cash values, the assessors classify all real property according to use. Local elected officials are then permitted to determine, within limits calculated by the Commissioner, what percentage of the tax burden is to be borne by each property class.

Tax Burden Determinations

The determination whether to allocate the tax burden by class is made annually. In a city, the decision to allocate tax burdens in accordance with the law is made by the City Council, with the approval of the Mayor; in a town, the Board of Selectmen at a public hearing makes the decision.

Phases

Massachusetts law provides for three phases: 

• Every city and town must value all taxable property at full and fair cash value.
• Each city and town must classify every parcel of property according to use.
• Each city and town which has revalued and classified may allocate its tax levy among classes of property.

Property Taxes

The major source of revenue for the 351 cities and towns in Massachusetts is the property tax. In Auburn, approximately 52% of the revenue needed to run the government and schools is derived from the property tax.

Assessments

The property tax is an "ad-valorem" (based on value) tax. The tax is apportioned to individual properties based on the value of the property. In Massachusetts, estimates of value are called assessments. The assessment of a large number of parcels for property tax purposes constitutes a highly specialized field of appraisal. It is termed mass appraisal, and requires significant statistical analysis in order to develop accurate values.

In Massachusetts, the property tax, both real and personal property, is assessed to the person who is the owner of record on January first. Any ownership subsequent to that date cannot be reflected on the tax bill.

In Auburn, the physical condition of real property on July 1st is the determining factor when establishing value for the fiscal year. It is, therefore, important that any new construction be inspected as close to that date as possible in order to determine the level of completion as of the assessment date.

Valuation

How Assessments Are Determined

Assessments for residential properties (1, 2, 3 family houses and condominium units) are typically based on the market approach to value. This approach incorporates a statistical analysis of property sales to determine market values as of January 1. This analysis takes into consideration only those transactions that are deemed "arm's length," e.g. sales that took place between a willing buyer and a willing seller, when neither party was under any compulsion to make the transaction. This data is incorporated into computerized valuation models, which simulate varying market conditions in each neighborhood and form the basis for residential values.

Assessments for office, retail, apartment and industrial properties are typically derived using the income and cost approaches to value. Under the income approach, fair cash value is derived from the property's ability to generate income. The assessors examine the rents generated by office, apartment, retail and other commercial buildings, subtract operating expenses to achieve a net income, then divide net income by an appropriate capitalization rate, in order to derive a market value for each parcel of commercial property.

Cost Approach

The cost approach measures the estimated cost of replacing or reproducing the buildings and improvements on a property - less any depreciation - plus the value of the land on which the building stands. The cost approach is mainly employed in determining the value of special purpose properties.

Questions

If you have a question on the assessment of your property, contact the Assessors Office during office hours. We will do our best to answer your questions and explain the process to you.

Commonwealth of Massachusetts Department of Revenue

The Commonwealth of Massachusetts Department of Revenue (DOR) certifies assessed values every three years. This is done through an extensive statistical analysis and audit of the procedures used by the local Assessors Office. Fiscal 2024 was our certification (revaluation) year. Sales that had occurred during calendar year 2022 were used for our analysis.