Why did my tax bill increase when my assessed value decreased or did not change?Because the current year tax bill is calculated based on the prior year tax bill, changes in assessed value do not have as much impact on a tax bill (up or down) as they did prior to the law change.
The abatement is the amount of additional taxes that would have been owed if not for the tax cap. For a property with a 3% tax cap, if the 2008 tax bill was $1,000 the 2009 tax bill could be no more than $1,030 even if the calculated taxes (assessed value x tax rate) were $1,050.
In the example above the $20 difference between the actual tax bill of $1,030 and the calculated tax bill of $1,050 is the abatement.
The abatement amount is identified on the tax bill. A decrease in assessed value will not result in a decrease in taxes until the prior year`s tax bill plus your tax cap percentage is greater than your actual calculated taxes. In an increasing market you may receive abatement for each year. In a declining or stagnant market your tax bill may eventually increase until there is no abatement for a tax year.
For most properties, fiscal year 2004/05 is the base year for applying the tax cap and calculating the abatement. Although values may have increased in succeeding years, the new law limits the increase to a tax bill to 3% or 8%.
Any increase in value (except increases due to improvement to or changes in the actual or authorized use of the property) that would cause a property owners tax bill to increase by more than 3% or 8% results in an abatement of the taxes.
For parcels created after fiscal year 2004/05, which are designated as "new parcels", the base year would be the year the parcel was created and the abatement and tax cap would apply from that year forward.