Boston’s City Hall has released its annual property tax assessment for FY12, increasing residential and commercial tax rates by the maximum allowed under Proposition 2 1/2.

For Fiscal Year 2012, the residential property tax rate will increase about 2% over last year (to $13.04 per thousand dollars of valuation from $12.79 in FY11, $11.88 in FY10 and $10.87 in FY09). Commercial property owners will also see a rate increase of 3% (from $31.04 in FY11 to $31.92 per thousand dollars of valuation).

Roughly 70% of the City’s budget is funded by real estate taxes and the Downtown Boston neighborhoods pay the majority of property taxes in the city. A $500,000 condo will owe a property tax levy of $6,520, under the new residential rate. The City’s statement says that the average property tax for a single-family home will increase about $150 to $3,305.

The City’s FY12 overall tax levy rises by $75 million over last year to $1.615 billion, with about half of the increase coming from the 2.5% increase allowed under Proposition 2 1/2 and the rest coming from new development added to the tax base. The total assessed value for FY12 is $88.5 billion, up 2% over last year.

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There are two factors that directly change an owner’s property tax: (1) a change in the assessed value and (2) a change in the tax rate. When tax officials last visited the North End / Waterfront Residents’ Association, it was noted that the tax rate is increased at the City’s determination between residential and commercial. When commercial property tax revenues are down due to the economy, the city tends to make up for it by increasing residential taxes. Officials noted the decrease in State and Federal aid has resulted in an overall increase for both residences and commercial properties.

Property owners are encouraged to file for tax abatements if they believe their assessment is incorrect. The deadline to file for a tax abatement is February 1st. Owners can also file for the residential exemption credit if they own and occupy a property as of the previous January 1st.

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