A Beacon Hill townhome that sold for $22 million this month set a record for the most expensive single-family home in the city.
But as far as Boston officials are concerned, it’s worth just about a quarter of that. The city’s Assessing Department valued the property at $5.2 million this year, which means the new owners’ tax bill will be significantly lower than it could have been.
The home is the latest high-value sale that some in the city are pointing to as evidence the city’s tax assessments are inequitable. A recent analysis by the Small Property Owners Association found that, on average, the 20 most expensive single-family home sales last year were assessed at just 68% of their sale price. In contrast, the homes at the bottom were assessed at 99.5% of their sale price.
But not everyone agrees. Ron Rakow, a researcher at the Lincoln Institute of Land Policy and former commissioner of the Boston Assessing Department, said that there’s more to the story.
“Anybody can go through an assessment roll and pick out five or 10 properties, or even 20 properties,” Rakow said. “But that’s just not a valid way of looking at it.”
Homeowners struggle with rising tax bills
Boston relies heavily on property taxes to fund city operations and services, with nearly 72% of this year’s budget expected to come from that revenue stream. While significantly higher than other cities around the country, Boston has struggled to diversify its revenue sources. That’s because Massachusetts law requires the Legislature to approve any new local taxes the city may want to levy.
As home prices have skyrocketed over the last few years and commercial property values have dropped post-pandemic, residential tax bills have spiked. The average tax bill for a single-family home went up by 13% this year, on top of last year’s average increase of 10.4%.
“This is not something that’s going to stop soon. And once it does stop, it’s not something that’s going to reverse itself,” Maynard said. “Property taxes are really steady. Once values go down, it’s pretty hard to get them back up.”
State Sen. Nick Collins, D-1st Suffolk, said he first became aware of the issue when he realized constituents in middle-class neighborhoods were feeling the burden of their property taxes much more than those in high-income areas. He said he found the data “staggering.”
“If everyone was being assessed at the same rate, something else had to be happening for the middle-class neighborhoods of Boston to be feeling disproportionately squeezed,” Collins said.
Wu has sought to reduce homeowners’ property taxes by increasing the tax rate for commercial properties. Real estate and business groups largely opposed the idea, saying it would hurt commercial property owners at a time when they are already struggling.
Though the mayor has repeatedly submitted the proposal to the Legislature since the spring of 2024, it has been blocked each time.
Some opponents of the proposal recently pointed to discrepancies in assessments of high-value properties as evidence that the city’s tax assessments are questionable. By ensuring each property owner is paying their fair share in taxes, they argue, the city could alleviate the burden on low-income homeowners without affecting commercial properties.
“The Mayor’s approach assumes Boston must raise taxes to the maximum allowable level and then redistribute the burden. The result is a zero-sum framework in which some lose so others lose less,” Collins wrote in a recent op-ed in the Dorchester Reporter. “A better approach ensures the City fully examines its valuation practices, spending growth, and the substantial resources taxpayers have already provided over decades.”
Collins said Friday that he is working on crafting legislation that would create a commission to address inequity in property assessments and determine how to rectify it and prevent it going forward.
The Boston Assessing Department did not respond to multiple requests for comment for this story.
What is vertical inequity?
The Small Property Owners Association analysis estimated that in total, the assessed values of the top 20 properties sold last year were $83 million below the sale prices — leaving potentially millions of tax dollars on the table that the owners of lower-priced properties have to make up for.
“The more value there is, the less everybody pays,” said Greg Maynard, founder and executive director of the Boston Policy Institute. “If there’s artificially some properties that are under-assessed, then that makes the people whose properties are properly assessed pay more.”
The numbers appear to show a phenomenon known as vertical inequity, where low-priced properties are assessed at a higher percentage of their market value than high-priced properties. The issue is not unique to Boston — economists say nearly every municipality around the country experiences vertical inequity to some extent.
Explanations of what causes vertical inequity can vary, but one of the most common is a simple lack of sale data for properties at the extreme ends of the price spectrum, which tend to change hands less often than mid-priced homes.
“If you own a house that’s below $2 million, there’s a lot of other homes below $2 million that are similar to yours that are being bought,” Maynard said. “It’s just much easier to draw a comparison versus these super high-end properties where there aren’t very many, and they’re unusual. A $20 million brownstone, or a $20 million penthouse in Seaport, they’re the same price, but it’s hard to compare them.”
Because it would be virtually impossible to individually assess every property in the city annually, the Assessing Department conducts a full revaluation every five years, as required by state law. The most recent revaluation took place in 2025.
Between reassessments, values are typically adjusted using a formula based on changes in the overall market. However, for any property that has sold, had a building permit taken out, been damaged by a fire or otherwise had significant changes in the past year, the assessment is adjusted accordingly.
But Rakow explained that without an assessor inspecting each property, it’s difficult to estimate an exact market value. Assessors may be able to see the outside of a home, but they can’t see the inside, where any number of features could make it more or less enticing to a potential buyer.
Assessors also can’t rely on individual sale prices to set values, because the final number can be inflated or deflated based on factors unrelated to the property itself. For example, a seller might accept an offer well below market value to hasten the sale, or a buyer highly interested in a property might submit an offer over the asking price to stave off competition.
“People think sale prices are market value. And that is not true,” Rakow said. “Believe it or not, the market value of any given property is unknown. Nobody knows exactly what the market value is, but we use sale prices as an estimate.”
Residential exemptions provide relief
Despite the criticism, when compared to other cities, Boston’s taxes aren’t actually that bad, according to Rakow. While slightly regressive, any vertical inequity falls “well within industry standards,” he said.
One metric used to measure vertical inequity is the “coefficient of price-related bias,” which compares the ratio of assessed value to sale price across the market. The closer to zero this number is, the more equitable the assessments are; Boston’s was 0.004 last year, according to Rakow’s analysis.
He attributed that largely to Boston’s residential exemption, which exempts a portion of a home’s value if the property owner lives there. The exemption is the same whether the home in question is a tiny condo or a multimillion-dollar mansion, which means it provides the greatest benefit to low-income homeowners.
While similar policies, sometimes known as “homestead exemptions,” exist in many places, Boston’s provides a much higher tax break than most. In 2025, the exemption saved homeowners up to $4,353.74 on their annual tax bill, according to the city.
“Lower-value properties are paying an effective tax rate that’s a fraction of what higher-value properties are,” Rakow said. “So it’s not only that the residential exemption addresses any slight regressivity in the assessment. It more than does that. It makes the property tax in Boston highly progressive, probably one of the most progressive in the country.”
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