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.
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
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
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.
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