A renovation is supposed to increase your home's value. In the market, it does. In your tax bill, it can do something else: create an over-assessment that overcharges you for years until you identify and challenge it.

Greater Boston has a housing stock that is heavily renovated. Older homes updated with open floor plans, finished basements, modern kitchens, additional bathrooms, and expanded living areas are common. And in many of these homes, the renovation created a property that the municipal assessment system does not know how to value correctly.

How the Over-Assessment Gets Created

When a significant renovation is completed and permits are pulled, the assessor's office typically reviews the property and updates the assessment. But the update may not be accurate. Mass appraisal models apply standard quality and condition ratings to properties based on permit records and broad neighborhood averages. If the renovation elevated the property's condition to "excellent" but the assessor recorded "very good," or if the assessor included square footage that should not be counted as above-grade living area, the resulting assessment is based on incorrect data.

The over-assessment that follows is invisible to the homeowner. There is no notification that says "your property was re-rated after the renovation and the rating is too high." The homeowner simply pays a higher tax bill and assumes it reflects the renovation's market value increase.

The Square Footage Problem After Renovation

Renovations frequently involve finishing previously unfinished spaces, basements, attics, bonus rooms over garages. Whether these spaces count as above-grade living area under ANSI measurement standards depends on specific criteria that mass appraisal systems frequently misapply. A finished basement that does not meet the above-grade living area standards should not be counted in the GLA used for assessment. If it is counted, the assessed square footage is inflated, and so is the tax bill.

A professionally measured floor plan after a renovation, one that applies ANSI standards to determine exactly what counts, can identify these discrepancies and provide the documentation needed to correct the assessment record.

The Condition Classification After Renovation

Municipal assessment systems rate property condition on a scale that affects the assessed value. When a renovation upgrades a property, the assessor may re-rate the condition upward, but may overrate it relative to what the market would assign based on actual comparable sales.

The fix is to establish what the market actually shows for properties with the same condition and quality rating, and compare that to the assessed value. If the assessed value exceeds comparable market evidence for the condition rating applied, the over-assessment is documentable and challengeable.

Why Proposition 2.5 Does Not Help You Here

Massachusetts homeowners sometimes believe that Proposition 2.5, which limits annual levy increases, protects them from over-assessment. It does not. Proposition 2.5 caps the growth of the total tax levy. It does not limit the assessed value of any individual property. If your property is over-assessed, you continue to pay more than your share of the total levy relative to your actual market value, for as long as the over-assessment stands.

Ready to Get Started?

Whether you are a homeowner, estate attorney, realtor, or investor in Greater Boston, Adam Wiener and the Aladdin Appraisal team deliver USPAP-compliant appraisals you can rely on. Call today: (617) 517-3711 | info@aladdinappraisal.com | aladdinappraisal.com