The Hidden Cost Most Boston Home Buyers Miss — And How to Use It to Your Advantage

The Hidden Cost Most Boston Home Buyers Miss — And How to Use It to Your Advantage

GREATER BOSTON REAL ESTATE | FY2026 GUIDE

A practical guide to Massachusetts residential exemptions for buyers, relocators, and owner-occupants

Last updated: FY2026 (February 2026) • Tax rates and exemption amounts can change annually.

In Greater Boston, two homes at the same purchase price in different towns can cost you $300–$400 more per month — not because of the mortgage, but because of how property taxes work. Here's what most buyers miss.

When you're comparing neighborhoods in Greater Boston, the conversation usually goes: schools, commute, home prices, vibe. Property taxes come up — but rarely with enough detail to actually change the decision. That's a mistake. For owner-occupants in the right communities, something called the residential exemption can quietly reduce your annual tax bill by $3,500 to $4,500 — or $300+ per month in your mortgage escrow. That's real money, and it deserves a real place in your neighborhood comparison.

What Is the Residential Exemption?

A residential exemption reduces a qualifying owner-occupant's property tax bill by excluding part of the assessed value of the home from taxation. In practice, if you qualify, your annual bill can be meaningfully lower than a non-owner-occupied property with the identical assessed value.

In Massachusetts, you typically qualify if you:

•   own and occupy the property as your primary residence (domicile/principal residence),

•   meet the local filing requirements, and

•   apply by the applicable deadline — often April 1st.

Second homes, investment properties, and non-owner-occupied properties generally do not qualify. But for buyers planning to live in what they purchase? This is a real and significant benefit — if you know where to look.

Why It Matters for Your Monthly Payment

Most buyers finance their purchase, and property taxes are typically paid through an escrow account as part of your monthly mortgage payment. So residential exemption savings don't just help at tax time — they show up in your cash flow every single month.

Annual tax savings ÷ 12 = approximate monthly impact in escrow. Example: $3,961 annual savings (Watertown FY2026) ≈ $330/month in lower escrow costs.

That kind of difference can affect monthly affordability, shift your debt-to-income ratio, and completely change how two towns compare when you're looking at the same price range.

FY2026 Exemption Snapshot: Greater Boston

Here's how the numbers actually compare across the towns we see buyers weighing most often. Rates shown are residential only (per $1,000 of assessed value). Monthly savings figures are approximate, based on published FY2026 exemption amounts. Note: a lower tax rate does not always mean a lower tax bill — assessed value and exemption eligibility also matter. Always confirm details with the local assessor before making a purchase or filing decision.

*Winchester rate from FY2026 tax classification materials; subject to final local posting.

Community-by-Community Notes (FY2026)

Boston

Boston offers one of the most well-known residential exemptions in the region. Qualifying owner-occupants can receive up to $4,353.74 in tax savings for FY2026 — roughly $363/month in escrow savings. The exemption is applied to the third-quarter bill (issued in late December), and the FY2026 filing deadline is April 1, 2026. Boston grants the exemption on a continuing basis once approved. See FAQ below for how ongoing eligibility works.

Brookline

Brookline's FY2026 residential exemption value is $354,974, producing tax savings of $3,634.93 for qualifying owner-occupants — approximately $303/month. Brookline's tax rate of $10.24 is lower than several nearby communities, making the combination of rate and exemption particularly attractive for buyers. Brookline grants the exemption on a continuing basis once approved.

Cambridge

Cambridge stands out for its comparatively low $6.67 residential tax rate — the lowest in Greater Boston — and its FY2026 residential exemption (30% structure) produces confirmed tax savings of $3,403, or approximately $284/month, for qualifying owner-occupants. The exemption value for FY2026 is $510,208, and the application deadline is April 1, 2026. The savings have grown steadily: $2,919 in FY24, $3,170 in FY25, and $3,403 in FY26. Cambridge also grants the exemption on a continuing basis once approved.

Somerville

Somerville offers a 35% residential exemption and FY2026 city materials indicate up to $4,578 in tax savings — approximately $381/month for qualifying owner-occupants. Somerville highlights this as a major owner-occupant benefit, and eligibility is tied to principal residence status. Somerville grants the exemption on a continuing basis once approved. Other exemptions may also be available.

Watertown

Watertown publishes a clear FY2026 summary: residential rate of $12.20, exemption value exclusion of $324,715, and tax savings of $3,961.52 — approximately $330/month. Watertown also provides practical eligibility guidance around domicile, Massachusetts tax filing address, and registration records. Watertown also grants the exemption on a continuing basis once approved.

Newton, Arlington, Belmont, Medford, Lexington, Winchester, Milton

These communities are frequently in the mix for Greater Boston buyers and offer strong schools, excellent housing stock, and established neighborhoods. They generally do not offer a broad residential exemption for all owner-occupants — but that doesn't mean no tax relief exists (see below). Their FY2026 residential rates are listed in the table above and should be confirmed with the local assessor.

Important: "No Residential Exemption" Doesn't Mean "No Tax Relief"

This is a nuance worth knowing, especially for seniors, veterans, surviving spouses, people with disabilities, and households facing hardship. Even in towns without a broad residential exemption, there may be:

•   personal exemptions for seniors or veterans,

•   surviving spouse or disability-based programs,

•   hardship-based relief,

•   and tax deferral options in some communities.

For example, Somerville's assessor page lists multiple relief options for seniors, veterans, and hardship cases. Arlington's assessor points residents to real estate exemption and property tax relief programs. Don't assume a town's tax picture based on one data point alone.

How to Use This When Comparing Neighborhoods

The residential exemption shouldn't be your only filter — but it can be a meaningful tie-breaker and a critical budgeting input. When you're comparing two homes or two towns, the full picture looks like this:

•   Purchase price — the starting point

•   Residential tax rate — the per-$1,000 levy

•   Exemption eligibility — do you qualify, and is there a deadline?

•   Estimated annual tax bill — after any exemption

•   Estimated monthly escrow impact — the number that affects your budget every month

•   Schools, commute, lifestyle priorities — the factors that can't be reduced to a spreadsheet

That combination gives you a more realistic cost-of-ownership comparison than list price alone — especially across towns where the tax math is very different.

Before You Apply: What to Know

Rules and deadlines vary by municipality, and exemption amounts can change every fiscal year. A few things to keep in mind:

•   You typically must apply and provide documentation — even if there is already an exemption in place from the previous owner.

•   If you recently purchased, eligibility timing may depend on the municipality's ownership/occupancy date requirement (often tied to January 1 of that fiscal year).

•   If ownership is held in a trust, estate, or other non-standard setup, confirm eligibility with the local assessor before assuming you qualify.

•   Always check the assessor's office for the current application, deadline, and documentation requirements.

Frequently Asked Questions

What is the residential exemption in Massachusetts?

It's a property tax reduction available to qualifying owner-occupants that excludes part of a home's assessed value from taxation. The result is a lower annual tax bill — and lower monthly escrow costs — compared to a non-owner-occupied property with the same assessed value.

Which Greater Boston towns offer a residential exemption?

In this FY2026 guide, the towns and cities with a broad owner-occupant residential exemption are Boston, Brookline, Cambridge, Somerville, and Watertown. Newton, Arlington, Belmont, Medford, Lexington, Winchester, and Milton do not offer a general residential exemption — though other tax relief programs (for seniors, veterans, and hardship cases) may still be available in those communities.

How much can I save with the Boston residential exemption?

For FY2026, qualifying Boston owner-occupants can receive up to $4,353.74 in annual tax savings — approximately $363 per month in reduced escrow costs. The exact amount depends on your assessed value and qualification status.

Do I have to apply for the residential exemption every year?

Boston, Brookline, Cambridge, Somerville, and Watertown grant the residential exemption on a continuing basis. Once approved, you generally do not need to reapply as long as ownership and occupancy remain unchanged.

However, you may need to reapply or provide updated documentation if:

• ownership changes

• the exemption does not appear on your tax bill

• the assessor requests re-certification

• your property status changes

Always confirm current requirements with the local assessor’s office for your specific situation.

Does the residential exemption affect my mortgage payment?

Not directly — but it does affect the tax portion of your escrow, which is typically included in your monthly mortgage payment. A $3,600 annual tax savings translates to roughly $300/month in lower escrow costs, which directly affects your monthly cash flow and affordability.

Can I get the residential exemption if my property is in a trust?

It depends on the municipality and the structure of the trust. Some towns have specific rules around non-standard ownership. Always confirm with the local assessor before assuming eligibility.

Ready to Compare Towns the Right Way?

Trying to figure out which town actually fits your budget once taxes, exemptions, and real monthly costs are factored in? That's exactly the kind of comparison we help buyers work through. Let's talk — and build a neighborhood comparison that shows the full picture, not just the list price.

_{Important Disclaimer}

_{Tax rates and exemption amounts change each fiscal year. This guide reflects FY2026 information available at time of writing and is intended as an introductory overview only. Always confirm current details with the local assessor's office before making a purchase decision or filing for an exemption. This is not legal or tax advice.}