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Once the Select Board has adopted the exemption and voted the percentage, the assessor determines the amount of value to be exempted from those qualifying parcels by calculating the following:
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The Select Board votes each year whether or not to adopt the exemption. The amount of the exemption must also be voted by the Select Board and may be no more than 35% of the average residential value islandwide (ie., based on all residential properties in the residential class).
Homeowners may qualify for the exemption on their primary residence. For the purposes of this exemption, taxpayer shall be interpreted as the “owner of record” as recorded in the Registry of Deeds and principal residence is the address of the taxpayer as used by the taxpayer for income tax purposes.
The real estate must be owned and occupied as the taxpayer’s principal residence as of January 1 of the year preceding the fiscal year. For example, for the Fiscal Year 2023 (July 1, 2022 through June 30, 2023), the taxpayer must have owned and occupied the real estate as their principal residence as of January 1, 2022.
Each year, the Select Board has the option of enacting a residential exemption of up to 35% of the ‘average residential value’ on Nantucket for those property owners who maintain their ‘primary residence’ in the Town of Nantucket. Each qualified parcel will receive the same dollar amount of exemption value and that exemption amount is recalculated every year. A qualified parcel in any one year will have that year’s exemption amount subtracted from the total taxable value of the property, with the real estate tax then being calculated on the unexempted remaining value.
A ‘primary residence’ is defined as being owned and occupied year-round by the applicant and by filing a federal and Massachusetts state income tax return showing the Nantucket property as the primary residence for the qualifying year. This office requires a copy of the front page of the returns submitted. Income data and social security numbers may be blacked out, but the form must show the real estate address to which the application is being made. If a PO Box is used as the primary mailing address, we may require additional evidence supporting year-round ownership and occupancy. The Board of Assessors has sole authority to determine what other documentation is acceptable as proof of primary residence when no tax return has been filed for the required year and may require a written explanation as to why a tax return has not been filed.
The residential exemption, under state law, is enacted by the Select Board for one fiscal year only and must be voted on each fiscal year as part of the tax rate hearing process by the Select Board, both to accept the MGL Clause and to select the designated percentage of the exemption. There is no requirement under state law for qualified recipients of the exemption to re-apply every year.
The date of qualification is January 1 prior to the start of the then current fiscal year. In other words, the property owner must be a full-time resident, owning and occupying the property as their domicile as of January 1, and be able to prove it is their primary residence by submitting the prior year’s federal and state income tax returns.
Once qualified, the exemption is valid and under state statute applicants are not required to file a new application every year. Exemptions generally remain valid until circumstances change, for example the property is sold, the form of ownership changes, the applicant no longer resides at the property as their primary residence, the property is under construction (and therefore unable to support year-round occupancy), or the Select Board votes not to accept the residential exemption clause. This office actively reviews granted exemptions and periodically audits current exemptions for compliance with state law and Department of Revenue guidelines.
It should be noted that this office does not actively seek out applicants for the residential exemption, or any other exemption for that matter. Exemption from property tax in Massachusetts is considered a privilege, and not a matter of right, and therefore the burden is placed upon the taxpayer to present their case for exemption by filing an application.
The residential exemption is not unique to Nantucket, approximately 20 other communities in Massachusetts have adopted the residential exemption.