Property tax assessments play an important role in real estate ownership, affecting both residential and commercial properties. While these assessments are necessary, they are not always accurate and may be subject to appeal.
If your property has been overvalued, filing an appeal can help ensure a fair and accurate assessment. Our real estate attorneys can guide you through the tax appeal process and help protect your financial interests.
High Swartz real estate attorneys serve residential and commercial clients throughout Bucks, Delaware, and Montgomery Counties, and the greater Philadelphia region.
Understanding Property Tax Assessments
In Pennsylvania, several sources assess property tax rates—counties, municipalities, and local taxing authorities such as 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, the amount you'll pay based on the assessed fair market value varies by county. Nonetheless, all PA property taxes reflect the assessed value of your home.
Mill Rates
Mill rates reflect the total value of property within your jurisdiction. They provide tax revenue to cover projected infrastructure expenses in your jurisdiction. That includes 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 assessed value times the millage rate. Mill rates frequently vary by property type, such as residential, commercial, or industrial. So, you may consider filing a property tax appeal if your property is incorrectly recorded.
Because real estate values fluctuate, tax assessors typically update the property's taxable value yearly. However, a constant in the Commonwealth is that 1 mil represents $1 for every $1,000 of assessed value.
Calculating Your Assessed Value
The formula for property tax levied on property is: (mill rate × 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 perfect, as errors can happen. Plus, market values can shift, making your tax bill seem exorbitant. Hence, you have the option of filing a property tax appeal.
How to File a Property Tax Appeal
Most Pennsylvania counties have appeal deadlines in 2023 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. 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 is only sometimes true -- presenting a solid, evidence-backed case 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.
Representative Experience
Real Estate Tax Assessment Appeals
- Tried a commercial real estate tax assessment appeal for a large retail shopping center, challenging an overvaluation approaching one hundred million dollars. The case addressed valuation methodology and tax burden allocation.
- Settled an office building tax assessment appeal,l resulting in tax savings exceeding 900,000 dollars. The matter involved income analysis and market valuation arguments.
- Resolved a commercial property tax appeal for a hospitality client,nt resulting in tax savings of approximately 3.2 million dollars. The settlement reduced long-term operating expenses and corrected the assessed value.
5 Reasons to Consider a Property Tax Appeal
Tax appeals ensure you don't pay an inflated tax bill. There are compelling reasons to examine your assessment, whether you own residential or commercial property.
Here are five reasons you might want to consider a property tax appeal:
1. Property Value
It's not uncommon for commercial and residential properties to be subject to an overvalued assessment. That can stem from outdated assessment techniques or changes in property market values.
It's a good idea to use a third-party assessor to help determine your home's value. For example, a real estate agent can help you determine whether the assessment is fair. Their analysis can illuminate whether or not contesting an assessment is worth the time and expense.
2. Inaccurate Property Descriptions
Sometimes, assessors 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 them for some of the following to determine if you should file a property tax appeal:
- 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?
- Is the purchase price accurate?
3. Comparable Values
If a property like yours receives a lower assessment, you might have a compelling case for an appeal. 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 such as 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 up to date can reveal new exemptions or reductions applicable to your property type. Again, that's where a real estate lawyer can be a valuable resource.
The Importance of a Real Estate Attorney for a Property Tax Appeal
You don't need to hire a real estate attorney to file a property tax appeal. However, the process requires expertise 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. As a result, they can significantly increase 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 real estate clients in the greater Philadelphia region and across Pennsylvania and New Jersey. The best Law Firm recognized us in their best edition for real estate law in Philadelphia. If you're ready to challenge your property tax assessments, call us.
