Property Classifications

Classification Laws
In 1978, the citizen's of the Commonwealth of Massachusetts adopted a constitutional amendment authorizing the General Court to classify real property into as many as 4 classes and to tax such classes differently. In 1979, the General Court adopted an act that implemented the desires of the citizens. The act enjoyed popular support as a means to prevent the shifting of taxes from business property onto residential property as a result of court-ordered revaluation's.

Classification Details
  • Classification does not raise additional dollars from the property tax.
  • Preferential tax treatment for residential property is not required but is, rather, a local option.
Commissioner of Revenue
The Commissioner of Revenue supervises the implementation of property classification. After the commissioner has determined that a city or town's assessed values represent full and fair cash values, the assessors classify all real property according to use. Local elected officials are then permitted to determine, within limits calculated by the commissioner, what percentage of the tax burden is to be borne by each property class.

Tax Burden Determination
The determination as to whether to allocate the tax burden by class is made annually. In a city, the decision to allocate tax burdens in accordance with the law is made by the city council, with the approval of the mayor. In a town, the board of selectmen makes the decision at a public hearing.

Massachusetts law provides for 3 phases:
  1. First, every city and town must value all taxable property at full and fair cash value.
  2. Second, each city and town must classify every parcel of property according to use.
  3. Third, each city and town that has revalued and classified may allocate its tax levy among the classes of property.
Classes of Property
The first step in implementing the Classification Act is to assign each property to the appropriate class. Assessors in Massachusetts must assign all real property in the city or town according to its use:
  • Commercial
  • Industrial
  • Open space
  • Residential
Personal property constitutes a separate class and is taxed under the commercial rate.

Each parcel must always be assessed at full and fair cash value.

Class 1 - Residential
This class includes all property containing 1 or more units for human habitation. The class includes accessory land and buildings such as swimming pools, tennis courts, garages and sheds. Single-family homes are in this class, as are large apartment buildings.

Class 2 - Undeveloped/Developable
This class includes land maintained in an open or natural condition, which contributes significantly to the benefit and enjoyment of the public. Such land cannot be held for the production of income and may be required to meet additional qualifying factors established by the Board of Assessors.

Class 3 - Commercial
This class includes any property held for the purpose of conducting a business, such as office buildings, retail stores, etc. Personal property, also, falls within the category of the commercial class.

Class 4 - Industrial
Includes any property involved in manufacturing or processing. It also includes real property used for storage, transmission, and generation of utilities regulated by the Department of Public Utilities.