CPA Surcharge Information

A key source of revenue for Communty Preservation Act (CPA) projects is a 1.5% surcharge on net property taxes, which Somerville voters approved when they overwhelmingly passed the CPA in 2012. The City began collecting surcharge revenue with the July 1, 2013 tax bills and will continue collections on a quarterly basis moving forward. The first $100,000 of property value is exempt from the CPA surcharge.

Exemption for Persons with Low and Moderate Income

Low-income persons and low- and moderate-income seniors are exempt from the entire CPA surcharge if they meet eligibility requirements (see below) and file an application with the Board of Assessors. Applications must be filed annually with the Board of Assessors. The Board will accept fiscal year 2019 (FY19) applications after the third quarter tax bill is issued January 1, 2019, and up to April 1, 2019. Residents who anticipate receiving an exemption must pay the surcharge by the due date on their quarterly tax bills. The City will issue a refund to qualifying residents once an exemption has been granted and the surcharge is paid in full.

Exemption Eligibility Requirements

To be eligible for exemption from the CPA surcharge in FY19:

  1. The applicant must own the property as of January 1, 2018. The applicant may be (1) the sole owner, (2) a co-owner, (3) a life tenant, or (4) a trustee with sufficient beneficial interest in the property under the terms of the trust.
  2. The applicant must occupy the property as his/her primary residence as of January 1, 2018.
  3. The applicant and each co-owner must have household income for 2017 that is at or below the relevant limit for that individual’s age and household size (see chart below). For properties subject to trusts, each co-trustee must meet the income limits.

 

Income Guidelines for Exemption from Community Preservation Act Surcharge

Household Size (# persons) Low Income for Non Seniors (Under 60) Moderate Income for Seniors (60 or Older)
1 $60,400 $75,500
2 $69,000 $86,250
3 $77,650 $97,050
4 $86,250 $107,800
5 $93,150 $116,450
6 $100,050 $125,050
7 $106,950 $133,700
8 $113,850 $142,300
Low & moderate income exemption from Community Preservation Surcharge based upon area wide median income published annually by HUD. Income limits are for FY 2019 and established as of 1/1/2018. Median income: $107,800.

 

When applying for an exemption from the CPA surcharge, income is calculated as follows: 

Household Income for CPA Exemption =
Gross Household Income – Dependent Deduction – Medical Expense Deduction

Where:

  • Gross household income includes income from all sources and from all household members who were 18 or older and not full-time students during 2017.
    • Income sources include: wages, salaries and bonuses, public and private pensions, retirement income, Social Security, alimony, child support, interest and dividend income, net income from business, public assistance, disability and unemployment insurance, and regular contributions/gifts from any party outside the household.
  • Dependent deduction is equal to the number of dependents in the household on January 1, 2018 (excluding spouse) multiplied by the allowance per dependent.
    • The allowance per dependent is currently $300 and is governed by the Department of Housing and Community Development’s regulations (760 Code of Massachusetts Regulations 6.05(4)).
  • Medical expense deduction is equal to total out-of-pocket medical expenses of all household members for 2017 exceeding 3% of gross household income.
    • Out-of-pocket medical expenses include: health insurance premiums; payments to doctors, hospitals, and other health care providers; diagnostic tests; prescription drugs; medical equipment; and other expenses not paid or reimbursed by employers, public/private insurers, or other third parties.