By Seth Daniel
City Manager Tom Ambrosino has issued a strongly favorable recommendation regarding a proposal from city councillors to raise the owner-occupant residential tax exemption to 35 percent.
Ambrosino had originally proposed the measure at 30 percent last fall. At the Council’s first meeting of the year on Jan. 25, Councillor Roy Avellaneda joined with several colleagues in pushing for an increase to 35 percent.
In his report to the Council this week, Ambrosino noted that an Assessor’s Office analysis comparing the 30 percent and 35 percent thresholds determined the increase would benefit many residents while negatively impacting very few—with potential annual tax savings of at least $451 per household.
Chelsea presently maintains 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 mechanism of the residential tax exemption shifts the tax burden from non-owner occupants and certain higher-valued owner-occupied properties to benefit residents in lower-valued homes. However, if insufficient non-owner occupants exist in the community, some owners of expensive properties could face higher taxes as a result.
According to Ambrosino’s analysis, that threshold stands at $625,000, with only four homes exceeding this amount.
For a $300,000 home, the study indicated that a 30 percent exemption would save $292 on this year’s tax bill. The same property would realize $451 in savings under a 35 percent exemption.
Across Massachusetts, 13 communities currently have residential exemptions in place, with most set at 20 percent.
Boston, Cambridge and Malden each maintain a 30 percent exemption, while Somerville stands alone with a 35 percent exemption.
Should the Council decide to proceed, Ambrosino indicated his readiness to prepare a Home Rule Petition for submission to the Legislature.
Legislative approval through a Home Rule Petition would be required to implement such a change.