All of the Vineyard’s towns adopted their tax rates, but not all of them will be using a state-approved residential tax exemption that aims to help year-round homeowners with affordability.
On Dec. 16, the town of Chilmark, at its annual property tax levy hearing, adopted a single tax rate for all types of properties in the town, joining Edgartown and Aquinnah. The select boards decided against adopting the exemption, but other towns on the Vineyard — Tisbury, Oak Bluffs, and West Tisbury — all introduced a form of the residential tax exemption this fall and winter.
A next step for these towns who voted in favor of it is to receive certification from the state Department of Revenue. Then, individual homeowners need to apply to their town’s assessor’s office to see if they qualify for the exemption. The department’s Division of Local Services describes the residential tax exemption as an option municipalities can adopt that shifts a part of the tax burden to second homeowners and those who own residential properties they don’t occupy, including apartments and vacant lands.
“The purpose is to try to keep properties a little bit more affordable for people who live and work in these resort communities,” said Jon Snyder, Tisbury town treasurer. “As you know, it’s getting harder and harder for people living on the Vineyard to afford the Vineyard.”
How much of an exemption is applied is based on a percentage of the average assessed value of residential properties in a municipality. According to the Division of Local Services, adopting a residential exemption increases the overall tax rate, since the levy collected from owners of residential properties remains the same, but the amount paid by those with one home is lessened.
The tax rates adopted by each Vineyard town this fall is a continuation of past practices, but West Tisbury adopted a significant spike in its residential tax exemption from 5 percent the previous year to 30 percent, currently the highest exemption rate on the Island. Tisbury and Oak Bluffs adopted a 22 percent and 15 percent exemption rate, respectively.
Tisbury was the earliest adopter of the exemption, and Snyder said that based on the town’s average assessed residential property value of $1.71 million, year-round residents who qualify for the exemption can expect to see roughly a $2,700 tax break, while those with second homes who don’t qualify can expect around $900 in tax increases.
“This is a progressive tax,” Snyder said. “It benefits low-end properties [more] than it does high-end properties.”
West Tisbury town assessor Mac Anderson previously told The Times that, considering average values are pulled up by higher-valued properties, calculating the tax break based on the median home value is closer to what the typical year-round resident might see in savings. For West Tisbury, which has a median residential home value of $1.48 million, that would be a savings of $2,383 for year-round residents who qualify for the exemption, and would increase the tax burden of second homeowners who do not qualify by $683.
Housing proponents have highlighted the residential tax exemption as just one tool that has been implemented to tackle the housing crisis, like the recent “Lease to Locals” program that incentivizes property owners to rent to locals through stipends rather than putting a unit up for short-term rental or leaving their home vacant throughout the year.
“This is one small part of the solution to tackle housing,” Snyder said of the exemption.
There is a state cap of 35 percent on residential tax exemption, but municipalities like Vineyard towns fall under a Seasonal Communities designation, which was passed as part of the Affordable Housing Act by Gov. Maura Healey’s administration. Districts with this designation have the potential to raise the exemption even higher, to 50 percent. No towns on the Cape and Islands have adopted the 50 percent exemption, although some communities like Provincetown and Truro have adopted a 35 percent total rate. Nantucket has opted for a 22 percent exemption.
But some Vineyard town officials are more wary of the exemption. James Hagerty, Edgartown town administrator, said that while the taxes are lowered for year-round residents, charging seasonal residents more can have “unintended consequences.”
“If you tax people like crazy, people are going to leave,” Hagerty said. “It’s Economics 101, a supply-and-demand factor.”
He also noted that there has been vitriol in some Cape communities over the exemption.
Massachusetts municipalities vote on whether to adopt a residential tax exemption when they set their annual property tax rates. Vineyard select boards hold public hearings to vote on the rate and whether to adopt a single tax rate or a residential tax exemption. This is then submitted to the state Department of Revenue for review and certification.
As of The Times’ print deadline on Wednesday, five of six Vineyard towns have received state approval for their tax rates.
But the exemption isn’t an automatic implementation. Although there may be slight differences per town, the main requirement is that a person owns and lives in a residential property as a primary domicile in the town. Those who are approved do not need to apply again the following year. Application periods are from January to late April or early March. Those interested in seeing if they qualify should reach out to their town’s assessor’s office.