Income Expense

If you need a new blank income & expense form, you can download one here.

If you’re on this page, it’s because you’ve received an income and expense return request from the Orleans assessing office and you’re wondering what it is and why we’re taking up your time with it. 

As the letter accompanying the form states, this is a routine part of every recertification we go through every five years. In past years, we’ve included a letter with directions on how to fill out the form, but we feel that the letter format is restrictive and outdated, so this time around we’re using this page as a means for offering guidance on how to complete the form and including answers to a few common questions. We’re sure we didn’t think of EVERY question, so this page can be updated with your feedback where needed. 

This form isn’t that hard to negotiate and, for most commercial property owners, we’re hoping it won’t take too much of your time. 

How do I complete this? Do I have to fill the whole thing out?

At the top of the right side of Page 1, you’ll see a list of commercial uses. Each use corresponds to a section of the form that we’d like you to complete for us. Here are some examples of how you would determine which sections apply to your property:

1. You own multiple commercial condo units and rent them out to local businesses. You would complete sections 2 and 5.
2. You own a building that has several apartments you rent out. You would complete sections 1 and 5.
3. You own a hotel, motel, inn. You would complete sections 3 and 5.
4. You own a building and run your own business out of it (no matter what kind of business it is). You would complete sections 2 and 5.
5. You own an industrial storage unit that you use just for storage. You would complete sections 2 and 5 but skip the income portion of 5.
6. You own a mixed-use building with commercial space on the first floor and rental apartments above. You would complete sections 1, 2, and 5.

You only need to complete sections of the form that correspond to how your building is used. 

The only section EVERYONE has to complete is Section 5. If you use accounting software or even spreadsheet software to track your business income and expenses each year, you can skip filling out Section 5 simply by attaching printouts for years 2023, 2024, and 2025 to the form when you submit. Just don’t forget to sign Page 1 and submit that too! 

I own multiple commercial units but only got one I&E form. What gives?

To reduce the amount of paperwork you and we have to handle, we mailed you one I&E form if you own multiples of the same kind of commercial property. For instance, some owners own one building with three commercial condo units in it. Some folks in the industrial part of town own buildings with anywhere from four to eight industrial garage bay units in each. You should be using that one form to give us the details for each unit's income and expenses. If you own a one commercial condo unit AND a separate building somewhere else in town, those are different uses so you'll receive an I&E return for EACH building.

Why do assessors need this information?

Mass General Laws require that we assess every property at its full and fair cash value (Ch. 59, Sec. 2), which is the price a willing buyer pays a willing seller under the terms of an arms-length transaction for all of the fee simple interest in a piece of real estate (land and buildings).

Assessors spend most of the calendar year looking at property sale prices and asking ourselves “Why that price?” and trying to glean motivations for all participants in the market. For commercial and industrial properties, the motivation is simple: a buyer is looking to make money. To that end, assessors are required to ask and answer the kinds of questions commercial buyers ask, such as:

1. How much income does this property currently generate?
2. How much does it cost the owner to keep it operating at a profit?
3. Is this the highest and best use for this property? 
4. How much of my own capital would I have to invest into the property to increase/maintain profits?
5. Knowing THAT, how much am I willing to pay for the real estate?

Sale prices are only part of the equation. By having accurate income and expense data on hand, we’re able to figure out the rate at which the profits a property generates translate directly into market value. That rate is called a capitalization rate, and solid cap rates that reflect actual market realities are invaluable to assessors.

What if I don’t want to give you all of this information?

You may think this information is none of our business…and that’s certainly your prerogative. We’re not going to chase you down for it. But we would ask you to consider the following.

If we don’t have good income/expense data, we’ll have to use either the depreciated cost approach or the sales comparison approach to value your property. These values almost always tend to be higher because 1.) the cost approach is based on Marshall & Swift’s cost indexes, which almost always show the cost for raw materials increasing dramatically year over year and 2.) the sale comparison approach analyzes sale prices for commercial properties, which are almost always climbing. Cape Cod has very little commercial real estate and none of it is getting cheaper to buy.

Furthermore, if you ever try to appeal your property’s value, Mass. General Laws Ch. 59 Sec. 61A mandates that you provide relevant income and expense information to the Board of Assessors before your appeal will even be considered. The same rule applies at the Appellate Tax Board in Boston. Failure to provide income and expense information results in an automatic denial of any appeal.

Submitting income and expense information for commercial and industrial properties once every five years leads to solid assessed values that generate solid capitalization rates that in turn lead to property values backed by legitimate market data.

When is this due?

State law says 60 days from the postmark date on the envelope…but we’re a bit more forgiving and realize you all have businesses to run. Just get it to us as soon as you’re able, ideally before the end of May.