How to adjust entries for Massachusetts Senior Circuit Breaker Credit for more than 1 Acre of Land

[JoJd]

Hi there,  I'm trying to confirm how to adjust my property tax entries in Turbo Tax for the Senior Circuit Breaker Tax Credit for Massachusetts because I have more than 1 acre of land.  My Property Tax bill shows both the Land Value and the Building Value, and says I have 1.97 acres of land.  Since there is a requirement to only enter the value up to 1 acre, then my GUESS is that I should divide the Land Value shown by 1.97 acres, and then add that new Land Value total to the Building Value.  Then I divide that new Total Taxable Value by 1,000, and finally multiply that number by the Residential Tax Rate which is also listed on my bill. 

When I enter the values exactly as they are on my Tax Bill (for the full 1.97 acres) I qualify for this tax credit and would get a refund of a few hundred bucks.  But when I adjust it as described above, I no longer qualify for the tax credit, as the amount I paid in tax is reduced..  I think its odd that this tax credit only applies to property tax paid for 1 acre, even if I meet all other eligibility requirements.   I tried calling my local Board of Assessors for help with this question but as expected they suggested I need a tax expert to answer.  Thanks in advance for any info!   

[BillM223]

I see that the MA website says, "contact the local city or town assessor for a breakdown of the real estate tax bill (e.g., 20 acre parcel with a house)." Is that what they refused to help you with? Are they aware that the state suggests that taxpayers call them?

Mass. General Laws c.62 § 6 (k)(1) does indeed say, "“Residence”, the building or portion thereof, including a mobile home, owned or rented and actually occupied by the taxpayer as the taxpayer's primary dwelling during the taxable year and located within the commonwealth, together with so much of the land surrounding it, not to exceed one acre, as is reasonably necessary to the use of the dwelling as a home. A residence may consist of a part of a multi-unit or multi-purpose building."

I assume that there is no water or sewer service to the bulk of the 1.97 acres, so I wouldn't prorate that.

As for the value of your property, I would find the value of an acre of unimproved land in your area (comparable, of course), then subtract 97% of that from that taxable value of your property (the .97 of your 1.97), then calculate the tax on your property (now shorn of the extra .97 acre), using the county appraiser's formula. That should give you a more appropriate tax for your property, and one that you could defend.

How does that work for you?

NOTE: I am not a Massachusetts resident; all I am doing is quoting MA statutes and making suggestions on how to interpret them. However, I am a credentialed tax professional (an Enrolled Agent).

[JoJd]

Thanks BillM223 for your reply - much appreciated!    The assessor I spoke with believes that the information provided on the Tax Bill is all that they could possibly provide to me, and that's because it does show both a Land Value and a Bldg Value separately, which are added together to come up with the Total Taxable Value.   However I haven't been able to find anything (using Google and/or reading the mass.gov website) that explains exactly HOW to adjust the tax paid if its more than 1 acre.  I am just guessing that what I described is something like what I'd have to do! 

Based on your suggestion, I'll see if I can find the value of an acre of unimproved land in my area and compare that to the Land Value shown on my tax bill, and see if there is much of a difference.  But I'm wondering about your comment to then subtract 97% of that land value;  I would think its more like 50%,  since 1.97 acres is ALMOST 2 acres, and so if I can claim up to 1 acre I figured taking about half of the land value would be appropriate, but maybe I'm not understanding why you'd suggest 97%?    If you don't mind clarifying that I'd appreciate it!    Thanks very much again 😉

[BillM223]

The 97% came out of my thought that the value per acre of a comp might be materially different from the land value on an improved property. Let's say that an acre that's unimproved might be $100,000 while an acre with a structure on it might be $150,000. So if your 1.97 acre improved property is valued at $250,000, then you would - for the sake of your calculations - subtract the $100,000 from the $250,000.

OK, I don't know what I was thinking either.

And yes the only suggestion I found for a method to determine the value is to go ask the assessor, who has apparently declined to be of any real help.

So, I would encourage you to document everything in writing, like you asked (name, date, etc.) the assessor to help you adjust the value per the state website, and the assessor declined to do so (since you are right that the total land plus the structure will undoubtedly total up to the appraised value). That was as helpful as saying that a black cat is a cat that's black.

But defend yourself. You may never be asked to justify your calculation, but it will be a huge relief to you (as well as a surprise to the MA tax people) that you are prepared with written documentation to back up your thought process.

[JoJd]

Thanks again for trying!   As for the Assessors response, I'm not taking it as a refusal to help me, but rather they explained that I already have a Land Value separated out on my Tax Bill, so they think I can calculate this on my own, and they cannot/will not reassess my land value for me for this purpose.     Anyway after doing a search for unimproved land of up to 1 acre near me, I'm finding those values are even less than what my own re-calculated Land Value would be, which would mean I'd have to decrease the property tax I paid even more, which gets me even further away from qualifying for this credit.   Therefore, since I'm assuming that I really DO have to adjust down that property tax I paid based on a lesser amount of land than I actually own, it seems obvious I can't qualify for the credit and I'll stop trying!   It just seems odd that we cannot claim the full tax we paid on our property for a credit like this - like why is it only based on 1 acre, if all other eligibility criteria is met?  I'm not expecting an answer to that question because I know "that's just the way it is"  so I think my quest to understand it stops here 🙂    Thanks again!

[BillM223]

Well, I guess you can add the "+ 50% separately stated water and sewer charges paid in the tax year" back in. I was thinking that it would be good to exclude these charges, but I see that the credit is based on how much certain expenses exceed 10% of your income.

As for why the law is the way it is (about the one acre), that is a question for your state legislator...who probably never thought about this unintended consequence...you can ask - it would give the legislator's staff something to do.