While obviously not many of us are a big fan of paying property taxes (or any taxes for that matter) - at least I'm not! - you should still take the time to learn what they are all about if you are thinking about buying a home or already own a home.  Many people, especially first time buyers, have some confusion over their property tax bill so I thought I would quickly review the Boston property tax situation since the new assessed values and tax rates were recently released.

There are two components of a tax bill: the assessed value and the tax rate.  The assessed value is the "full market value" (at least is supposed to be) of your property according to the city assesssor.  The city of Boston completes a full revaluation of its property every 3 years (most recently in 2007 and next in 2010).  In the interim years, the city makes adjustments based on real estate market trends to maintain that "full market value" assessment.  I put "full market value" in quotes because its really a loose term, and quite frankly many homes are not 

In many cases, your mortgage lender will break your annual tax bill into monthly amounts that they add to your mortgage bill for you to pay each month and they hold that in escrow for you.  The mortgage company then pays the city on your behalf out of that escrow when the property taxes are due (quarterly).  However, it's still important to pay attention to your tax bill to make sure this is being done properly (prevent over and under payments for example).

For example, fiscal year 2009 runs from July 1, 2008 to June 30, 2009 and the tax bill is based upon the assessed value and tax rate issued in January 2009.*

Q1: Bill issued July 1, 2008

*If you're wondering how they can issue a bill for Q1 and Q2 in 2008 PRIOR to even having the assessed value or tax rate issued, what happens is that the city issues "preliminary" bills