A Residential Tax Exemption is enabled by a city or town to drop the assessed value on homeowner real estate property values for a discount payment on residential taxes. There are no income or asset thresholds or requirements other than filing with the city or town. Some communities that have a residential exemption are Barnstable, Boston, Brookline, Cambridge, Chelsea, Everett, Malden, Nantucket, Provincetown, Somerset, Somerville, Tisbury, Waltham, and Watertown. These 14 communities represent 18% of all Massachusetts residents. At Lannik Law we always check with a client’s city or town to ensure our owner-occupier clients are taking advantage of this exemption. These discounts can be significant, and must always be considered when dealing with a client’s property in the towns where they are available.
Generally speaking, the cities and towns have no problem with allowing the exemption while placing real estate into a revocable trust, provided there is a relationship between the homeowner and the trust. But placing the property into an Irrevocable Trust can lose you this exemption. Therefore, in a town that offers a residential exemption, the benefit of the exemption must be weighed against the rationale and benefit of placing the property into an Irrevocable Trust. In recent years there have been some exceptions to this rule, but most cities and towns take a hard line toward Irrevocable Trusts. Most people want to utilize the irrevocable trusts for Medicaid purposes, or for estate planning. Ultimately saving the home from any sort of MassHealth lien can be more valuable than the exemption that is offered. At Lannik Law, we help you work through this question.