Salem, Massachusetts, describes a local property-tax exemption for an ADU rented at an affordable rate. The maximum monthly rent, including utilities, must not exceed 70% of the current HUD Fair Market Rent for Salem. Fair Market Rent changes annually, so an amount from a prior year should not be used for a new lease without checking HUD’s current limit.
What the City requires
The Assessing Department page lists four annual requirements: a certificate of occupancy from the Building Department, a signed lease or a qualifying no-rent tenant attestation and contact information, a scheduled interior inspection of the property, and a completed application. The City says the exemption amount is based on the value of the additional kitchen and bathrooms. In some cases, property classification may change based on where the unit is located, which can affect the assessment.
The City also states that a property owner who has received or is seeking a City ADU construction grant is not eligible for the tax exemption during the grant-loan term or for 20 years. Confirm how this rule applies before combining City assistance with tax relief.
Check the next filing cycle
Salem’s page says applications are accepted each year from February through September 1 so the exemption can be reflected on bills generated in January. The 2026 September 1 deadline has passed. The page does not establish the next filing period’s current FMR, application materials, or a parcel’s exemption amount. Contact the Assessing Department before the next cycle to confirm the rent ceiling, forms, inspection, and valuation.
This is a Salem property-tax program, not a construction grant or Massachusetts-wide exemption. It does not replace an occupancy permit or other ADU approval. For comparisons with grants and other public benefits, see the current ADU programs guide and the funding-conditions guide.