Property Tax Protest: 5 Reasons to Consider an Appeal
Property tax assessments are critical components of real estate ownership. They impact both commercial and residential property owners. While necessary, they aren't always correct, opening the opportunity for a property tax protest.
If your tax assessment is out of line, you should consider submitting an appeal to ensure fairness in property valuation. You should also consider consulting a real estate attorney near you to help with the tax appeal protest.
High Swartz attorneys serve residential and commercial clients in Bucks, Delaware, and Montgomery County, PA.
Understanding Property Tax Assessments
In Pennsylvania, several entities assess property tax rates, such as counties, municipalities, and local taxing authorities like school districts. Consequently, property tax levies vary according to your address.
Your PA county tax assessor is the primary resource for understanding local property taxes and valuation. Moreover, how much you'll pay on the assessed fair market value varies by county. PA property taxes reflect the estimated value of your home. Discrepancies in estimated value often lead to property tax protests.
Mill Rates
Mill rates reflect the total value of property within your jurisdiction. They provide tax revenue to cover projected expenses in our jurisdiction's infrastructure, including items like police and emergency services and public schools.
The millage rate determines what you pay for Pennsylvania property taxes. Your property tax equals your property's estimated value times the millage rate. Mill rates often vary for different property types, such as residential, commercial, or industrial properties.
Because real estate values fluctuate, tax assessors typically update a property's taxable value annually. However, one consistent aspect in the Commonwealth is that one million represents $1 for every $1,000 assessed value.
Calculating Your Assessed Value
The calculation formula is Property tax levied on property = (mill rate x taxable property value) ÷ 1,000.
So, let's assume your mill rate is 7, and your residence has a taxable value of $150,000. Based on the formula, your tax bill is $1,050. So, $150,000 times 7 equals $1,050,000, then divide that by 7, and you get $1,050.
But here's the thing: assessments aren't infallible, and errors can happen. Plus, market values can shift, making your tax bill seem exorbitant. Hence, you have the option of filing a property tax protest.
5 Reasons to Consider a Property Tax Protest
Tax appeals ensure you don't pay an inflated tax bill. Whether you own residential or commercial property, there are compelling reasons to examine your assessment.
Here are five reasons you might want to consider a property tax protest:
1. Property Values Can Be Overvalued
It's not uncommon for commercial and residential property to reflect an overvalued assessment. It can stem from outdated assessment techniques or changes in property market values.
It's a good idea to use a third-party assessor to determine the value of your home. For example, a real estate agent can help you determine whether the assessment is fair. Their analysis can illuminate whether contesting an assessment is worth the time and expense.
2. Property Descriptions Can Have Inaccuracies
Sometimes, asses rs record information incorrectly. For example, the description of a property, its size, number of rooms, or even its usage isn't accurate.
For example, get a copy of your tax records and review it for some of the following:
- Is your home correctly classified as residential property?
- Is the size of your home and the lot accurate?
- Is the number of bedrooms and bathrooms correct?
- Are defects in your home, such as a leaky basement or an aging roof, mentioned?
- Is the age of your home accurately stated, and is the purchase price accurate?
3. Comparable Value Discrepancies are Grounds for a Property Tax Protest
If a property like yours receives a lower assessment, you might have a case for a property tax protest. For example, find several homes of similar age and square footage. Then, see how their assessments align with yours.
Search in your area for recent sale prices of homes similar to yours on a website such as Zillow.com or Realtor.com. Any sales in the past few months may have occurred after your assessor's latest property evaluation.
4. Economic Hardships
Events like regional economic downturns, pandemics, or natural disasters can affect property values. It's only fair that tax assessments reflect these changes.
5. Legal Changes
Tax laws evolve, so staying updated can reveal new exemptions or reductions applicable to your property type. Again, that's where a real estate lawyer can be a valuable resource.
How to File a Property Tax Protest
Most Pennsylvania counties have appeal deadlines 202 between late July and September 1. However, Philadelphia extends its deadline until October 2, 2023.
You can file an appeal with the appeal board via email or online, though this route may not be available in all counties. It's best to check with the specific county's Board of Assessment Appeals for their preferred filing method. More details are available from the Department of Revenue. You can file your appeal form here if you're living in Philadelphia.
One widespread myth is that challenging assessments will inevitably lead to higher taxes. This concern is only sometimes valid—presenting a solid case backed by evidence can lead to a reduction instead.
By the way, if you're transferring a commercial or residential property, you'll want to familiarize yourself with transfer taxes. For example, Philadelphia's transfer tax is among the highest in Pennsylvania.
The Importance of a Real Estate Attorney
You don't need a real estate attorney to file a property tax protest. However, the process requires experience to navigate the legal intricacies and address essential details for your tax appeal.
A local real estate attorney has valuable insights into real estate law. Additionally, they can simplify the process and reduce the risk of overlooking critical elements, significantly increasing the chances of a successful appeal.
Before meeting with an attorney, you'll need to document the current value of your property and its assessed value.
Our law firm serves clients in Bucks, Delaware, and Montgomery County, PA. Best Law Firms recognized in their 2024 edition for real estate law in Philadelphia. So, if you're ready to challenge your property tax assessments, call us.