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Rethink Your Monthly Budget with the City of Boston Residential Tax Exemption

Posted by Justin Rollo February 10, 2014 01:06 PM

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When I first speak to buyers I go over a myriad of things, most important of which is monthly budget. We will connect with their lender and run numbers for their mortgage and principal. We'll then end up adding on our property taxes, home insurance estimates and PMI (if needed) to come up with their total cost and buying power. What many folks don't consider is the huge difference that property tax rates can make on your monthly budget. By utilizing the City of Boston Residential Tax Exemption you can significantly lower your monthly payments.

Let's take a quick look at two scenarios for two different houses. One is in Boston and one is a home for sale in Milton.

Milton Home
List Price: $399,000
Town Assessed Value: $312,100
Annual Taxes: $4,587.87

Now this tax rate equates to a monthly tax cost of $382.33

If our buyer has a 20% down payment and we use today's rates on a 30yr fixed mortgage we have the following breakdown:

Principal + Interest: $1,594
Taxes: $382
Insurance: $70

TOTAL MONTHLY PAYMENT IN MILTON: $2,046

Now, let's take a look at a similar property in Boston's West Roxbury neighborhood.

West Roxbury Home
List Price: $399,900
Town Assessed Value: $317,700
Annual Taxes (with City of Boston tax exemption): $2,232.83

This tax rate equates to a monthly property tax cost of $186.07

Principal + Interest: $1,597
Taxes: $186
Insurance: $70

TOTAL MONTHLY PAYMENT IN BOSTON: $1,853

Now there are obviously other factors that are involved in picking a home and both West Roxbury and Milton have strengths and weaknesses. However, for those of you who are looking to stretch your monthly budget a bit the City of Boston is a good place to look due to the residential tax exemption. In our example with homes with almost exactly the same list price and assessed price buying in Boston saved our buyer almost $200/mo.

Are you looking to buy a home and want to view every listing in Massachusetts? Click here to begin viewing homes now. Are you interested in other cities which offer residential tax exemptions in MA? We created a page explaining the tax exemptions in each city and town in the Greater Boston area.

How important is the tax exemption to you? Let us know in the comments.

Justin Rollo is a real estate agent in South Boston, MA. The main contributor to Boston Real Estate by the numbers Justin posts a wide variety of information for the blog. Servicing all of the Greater Boston area he helps buyers and sellers with their real estate needs. You can view all properties online on our Website or connect with us on Facebook, Google+, and Youtube.
This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About this blog

Justin Rollo of RE/Max Realty Plus in South Boston provides an analytical and irreverent look at the Boston real estate market. More »
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