Increase in Owner Occupant Tax Exemption Gets Ambrosino Approval

By Seth Daniel

A request by city councillors to increase the owner-occupant residential tax exemption to 35 percent has gotten a very positive recommendation by City Manager Tom Ambrosino.

The measure was called for by Ambrosino last fall at 30 percent, and then Councillor Roy Avellaneda and several other colleagues called for the measure to increase to 35 percent at the first Council meeting of the year on Jan. 25.

This week, Ambrosino reported to the Council that a study of the 30 percent and 35 percent threshold by the Assessor’s Office found that there move would hurt very few and help many residents – to the tune of at least $451 in tax savings per year.

Chelsea currently has a 20 percent owner-occupant residential tax exemption.

“Based upon this analysis, the City Council can be confident that, if it were so inclined, it could seek to increase the Residential Exemption from 20 percent to 35 percent with significant benefit to the overwhelming majority of Chelsea homeowners,” he wrote. “In Chelsea, there is a sufficiently high percentage of non-owner occupants to make this program successful. In fact, with the current 20 percent exemption, the cut off for residential owner occupied properties that pay a higher tax with he exemption than without are homes valued at greater than $625,000.”

The residential tax exemption works by shifting the tax burden to non-owner occupants and to some higher valued owner-occupied properties. The idea is to reward residents living in lower valued homes and give those residents a break on their property taxes. One consequence, though, is that if there aren’t enough non-owner occupants, then some owner occupants in high-value homes can be hurt by the measure.

In this case, Ambrosino said that cut off was the $625,000 number and only four homes fall into that category.

For a $300,000 home, the analysis showed, that a 30 percent exemption would have yielded $292 in savings on the tax bill this year. For a similar home, the 35 percent exemption would have yielded $451 in savings on the tax bill.

Right now, 13 communities in the state have a residential exemption, with the majority of those being at 20 percent.

Boston, Cambridge and Malden have 30 percent right now, and Somerville is the only community to carry the 35 percent exemption.

Ambrosino said he would be ready to draft a Home Rule Petition to the Legislature is the Council so chooses.

In order to make the change, the State Legislature would need to give its approval in what is called a Home Rule Petition.

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