Rebecca Baker, Town of Lancaster Assessor addressed the town board at their work session on November 7th on their need to examine and decide what action they want to take on the new exemption laws, condo exemptions, and the impact of the equalization rate decline by March 1, 2023, taxable status day.

New Tax Exemption Laws

The state allows municipalities to determine whether they want to continue offering exemptions and at what income limits and the levels of exemptions. Baker advised the board decisions were not imminent, but it was time to start considering where the town wanted to be.

Baker stated there were two reasons to give an exemption. How much you want to help someone and how much you want to reward someone. The help someone reduces their taxes, like for disability, or senior low-income exemptions. Exemptions that help to reward someone for their service, like veterans, fireman, clergy.

It also provides for first time homebuyers an exemption. That expires at the end of 2022 so the board should consider whether it still wants to offer that exemption as we will be looking at the new tax rolls for 2023.

Baker provided a list comparing exemptions of other municipalities and it showed Lancaster to be quite generous. However, the list was old, and municipalities were updating their exemptions to reflect today’s economy. “Do you want to provide more people with an exemption, keeping in mind that once you provide an exemption on time for someone else has to make up the difference.”

Baker encouraged the board to consider what exemptions it wanted to provide and at what levels. Speaking on the veteran’s exemption Baker spoke that the way it currently works is that if you are a war vet and served in war time you get a 15% exemption up to $18,000. Combat, an additional 10% with a $12,000 limit – a possible $30,000. Disabled vet, up to $60,000. The county just increased theirs to $30,000, an additional $20,000 limit for combat, and $100,000 for a disabled war time vet. The town has to decide whether it wants to follow suit as it has done in the past or leave it where it’s at.

Condo law

“The state passed a law which no longer allows homes like the one on Blackstone, individual free-standing homes, to receive condo status,” declared Baker. “What is currently there will be grandfathered in forever. However, any new condo homes like that would not get the discount. However, they are also offering to each municipality taxing jurisdictions the opportunity to say, ‘we don’t want any condo status.’ So even the ones that are like patio homes, the townhouses, those that currently get condo status, the board can say ‘we don’t want to offer that.’ That requires action, resolution, local law…”

Baker said she was just bringing this to the board’s attention because 2023 is soon and decisions will have to be made. Councilman Leary asked whether the condo status change would only affect new builds. He was told that was the change which only makes sense. Those already receiving condo status should not be punished for what was the law at the time. Baker declared all this has to be settled by March 1, 2023, taxable status day.

Equalization Rate – Based on 100% Market Value

Baker also disclosed that the town’s equalization rate also plays into what a party gets on their exemption. “The basic star exemption is a $30,000 discount off your property assessment. But this year our equalization rate is 87%. Our assessments are falling behind and that means next year you will get only 87% of the $30,000 exemption ($26,100). Baker disclosed that she just received notification that it is likely that our 87% equalization rate will drop another 15% in 2023 – and that’s just based on what houses are selling for.”

“The price of housing has not gone down,” asked councilman Leary. Baker responded ‘no’ they are not. “We have less homes that are selling. I have houses that in 2020, when we did the reval (property reassessment), that were assessed at $350,000 to $400,000 are now selling for almost $800,000. We are falling behind in market value, and that affects the equalization rate, and that affects your tax exemptions.