Exemptions to the CPA Surcharge
As part of the vote to accept the provisions of CPA, a community may adopt and offer to property owners up to four different exemptions to the CPA surcharge. These possible exemptions include:
- Property owned and occupied as a domicile by a person who would qualify for low income housing or low or moderate income senior housing in the city or town (see below for these income limits listed by town). Residents must apply annually to receive this exemption.
- Class three, commercial, and class four, industrial, properties in cities or towns with classified ("split") tax rates (Very few communities have adopted this exemption, as it fully exempts all commercial and industrial properties from the CPA surcharge and places the full burden of supporting CPA on residential properties).
- The first $100,000 of taxable value of residential real estate. This exemption is automatically applied to residential property taxes prior to bills being issued by the city or town.
- The first $100,000 of taxable value of class three commercial, and class four industrial properties.
In addition, any portion of a taxpayer’s real property taxes that are exempt under Chapter 59 of Massachusetts General Laws are also exempt from the CPA surcharge. A municipality may add or remove any of these exemptions with approval of the legislative body and subsequent voter approval at a ballot election.
Is there a way to predict how many households will receive these exemptions and how they will impact local CPA revenue collections?
Low-income/low-moderate-senior income exemption: To receive this exemption, property owners must submit an annual application to the city or town. As such, the exemption's impact will vary based on how many residents apply and qualify. In all cases however, CPA revenue data from the Department of Revenue (DOR) shows that this exemption has a minimal overall impact on a municipality's CPA collections.
This chart displays an analysis of CPA revenue data from FY23 in all municipalities that have adopted the low-income/low-moderate-income senior exemption. The majority of CPA communities offering this exemption experienced less than a 1% reduction in expected CPA revenue. So while this exemption can be critical for residents that need it most, CPA communities do not typically experience a significant drop in revenue as a result.
First $100,000 of residential or commercial property value: While the low/moderate income exemption requires taxpayers to fill out an application annually, the exemptions for the first $100,000 of residential and/or commercial property are applied to every property owner’s tax bill before they are mailed. Every property owner will receive this exemption automatically, without an application being necessary. Your municipal assessor can easily determine how these exemptions will affect local revenue collections from the CPA surcharge, and the Community Preservation Coalition can also provide an estimate by request.
What are the low and moderate income guidelines in my community?
These CPA income guidelines are derived from the United States Department of Housing and Urban Development (HUD) areawide median income figures. Persons and families whose annual income is less than 80 percent of the areawide median income qualify as low income. Persons of the age of 60 or over whose annual income is less than 100 percent of the areawide median income qualify as moderate-income seniors. These figures are updated annually.
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How do I apply for an exemption to the CPA surcharge in my community?
In communities that have adopted the low/moderate income exemption, eligible property owners must submit an application annually to receive the exemption. To obtain an application, contact the assessor's office at your town or city hall.