Taxes to jump as Hub revalues homes, properties

Boston property owners, already shocked by the cooling real estate market, will see their property taxes go up by more than 10 percent next year because a new citywide assessment is based on year-old real estate values, city officials said yesterday.

The annual tax bill for the average single-family house will increase from $2,755 this year to $3,093, starting in January. The estimated bill for the average two-family house will jump from $3,307 to $3,857, while the bill for the average three-family house is expected to increase from $3,725 to $4,309.

Letters with the new valuations and estimated tax bills were mailed this week. Property owners have until December to appeal the new assessments.

"We certainly recognize that in many residential neighborhoods, the real estate market has weakened, but by law we have to use 2005 real estate sales to set home values," Assessing Commissioner Ronald W. Rakow said.

The increase follows the city's first comprehensive revaluation of properties since 2003, Rakow said. The fiscal 2007 assessments released this week assign residential property values on Jan. 1, 2006, which were calculated based on 2005 activity in the real estate market.

According to the city's calculations, the assessed value of a single-family house shot from $368,626 to $420,900 in the year ending Jan. 1, 2006. A two-family house went from $418,256 to $490,986 and the average three-family house assessment increased from $455,839 to $532,441.

The actual property tax rate is expected to drop from $11.12 per thousand dollars of assessed value to $10.90 in the new fiscal year, but because of the higher assessments, many will be paying more. The total property taxes expected to be billed is $1.27 billion, up from $1.21 billion.

The city sets residential property values once a year, but every third year, officials use a more comprehensive process. For the past two years, Rakow said, assessors have based values on trends in particular neighborhoods of the city. For example if sale prices of two-family houses in a certain section of Dorchester increased by 10 percent in a given year, then the assessments of all two-family properties in the area would generally increase by the same amount the following year.

This year, Rakow said, for the more comprehensive review, assessors used hundreds of variables aside from locations and sale prices to calculate values. The assessment is based on the value of the property on Jan. 1, 2006, and the "location, style, age, size, and condition," according to the assessor's website. The assessor's site suggests that if the market stays down, the taxes could drop, too, adding that "market activity occurring after the assessment date will be captured" in the next fiscal year.

Property owners have deluged city officials over the phone and in person with complaints and questions about the estimated valuations and taxes. At Councilor John Tobin's community outreach hours in West Roxbury yesterday morning, at least a half-dozen residents showed up, clutching notices from the Assessing Department.

"There's a lot of people out there who don't know how these assessments work," Tobin said. "In some cases, assessments have gone up $100,000. I had a woman this morning, $150,000. I'm not exaggerating when I say she was close to tears."

When South Boston resident Joanne McDevitt opened the mail Thursday, she said she let out a gasp when she saw the notice. McDevitt and her husband owe $6,942 in property taxes next year, at least $1,000 more than this year, she said.

The new assessments increased the value of her South Boston three-family house from $648,400 to $774,100.

"I almost died," she said. "And you know everything I read is that the real estate market in Massachusetts is down. And there's trouble renting apartments, even in South Boston, because there's such a glut of new condominiums. If I can't rent my property, how do I pay the taxes?"

Boston property taxes have roughly doubled for single-family houses since the early part of this decade, according to the Assessing Department, but they remain lower than surrounding communities. In 2006, the property tax bill for the average single-family house in Dedham, for example, was $4,285. It was $3,683 in Quincy and $3,944 in Watertown.

"The increase is fairly substantial, but the overall tax bill is fairly reasonable," said Samuel R. Tyler, president of the Boston Municipal Research Bureau, a business-funded government watchdog.

The state must approve the new assessments before they are finalized, probably next month, and the new tax rate must be finalized before bills are mailed in January, Rakow said.

Over the next two weeks, assessing officials said, residents who have concerns can contact City Hall, and assessors will review and revise estimated tax bills when approriate.

Donovan Slack can be reached at dslack@globe.com.