This article is intended to provide a brief summary of the real estate tax appeal process in Pennsylvania.
Due to the sluggish home sales in the past three to four years, home values have declined. Although sales data indicates that home have lost value most local tax assessors do not readily adjust the values of home as a matter of course. Instead, the law presumes the tax assessor’s valuation of a home within the taxing district is correct. The burden of proof is shifted to the home owner to demonstrate the home has suffered from a loss of value.
The homeowner must appeal the total assessment attributable to the property. Therefore, the basis of the appeal is challenging the total assessment and not the real estate taxes.
TOTAL ASSESSMENT = LAND ASSESSMENT + DWELLING ASSESSMENT
The Total Assessment is used to calculate two main factors as they relate to a home:
(1) Fair Market Value (FMV): is the amount of money your home is worth
To determine FMV, the TOTAL ASSESSMENT is divided by the County’s Common Level Ratio Factor (CLR).
The CLRs for each county can be accessed here.
EXAMPLE: 123 Main Street, Montgomery County
TOTAL ASSESSMENT = $250,000.00
Montgomery County CLR = 56.1 or .561 (for division purposes)
$250,000 / .561 = $445,632.80 (FMV)
This should be the first step in determining if your property has a good basis for an appeal.
(2) Computation of Real Estate Taxes: The TOTAL ASSESSMENT multiplied by the local municipality’s millage (tax rate) will determine your total real estate taxes.
Therefore, the lower your TOTAL ASSESSMENT the lower your taxes are year after year.
The millage varies for each municipality and is determined by multiplying the TOTAL ASSESSMENT (per thousand) by the associated millage.
EXAMPLE: 123 Main Street, Montgomery County, Lower Moreland Township
TOTAL ASSESSMENT = $250,000.00
Lower Moreland Millage Rates: Total Millage = 33.2753
250 * 33.2753 = $8,318.83 TOTAL REAL ESTATE TAXES
STEPS TO FILE AN ASSESSMENT APPEAL
1. Determine the FMV of your home in the shoes of the county tax assessor
Find the TOTAL ASSESSMENT and divide by the CLR factor
2. Determine the comparable values of recent sales in the neighborhood
It is NOT a basis for an appeal by comparing the taxes your neighbor pays. The evidence utilized at the tax appeal hearing must show RECENT comparable sales to demonstrate the current value of your home.
Marginal evidence can be in the form of Multiple Listing Service (MLS) listings with a SOLD or SETTLED status. These may be obtained from a licensed PA Realtor. This is not the best evidence since you are relying on a real estate agent to search the correct parameters. Realtors are not experts with respect to real estate values. Additionally, MLS evidence can be rebutted by the local tax assessor and there will be no basis to reply at the hearing.
The best evidence is in the form of a Real Estate Appraisal in accordance with USPAP standards performed by a licensed PA Real Estate Appraiser. A Real Estate Appraiser will research the comparable sales and use those sales as the basis for the real estate value. Further, the Real Estate Appraiser will personally inspect, measure, and notate the characteristics of your home and establish the FMV. It is best if the appraiser appears at the hearing to testify as witness as to the value of the home and the market trends in the area. The appraiser will also be able to clarify or justify their findings in the event the local tax assessor attempts to argue their position.
3. File the appeal
If you determine the FMV as set determined by the County Tax Assessor is substantially higher than the comparable sales in the neighborhood, then you have a basis for an assessment appeal.
Make sure you file the appeal prior to the deadline in your county and submit the associated fee (if any).
COUNTY DUE DATE 2011 CLR FILING FEE
Berks 8/15/10 70.1% $0
Bucks 8/01/10 10.9% Residential: $25
Chester 8/01/10 55.4% Residential: $25
Cumberland 9/01/10 80.1% Residential: $10
Dauphin 8/01/10 70.6% Residential: $25
Delaware 8/01/10 64.2% Residential: $50
Lackawanna 9/01/10 17.0% Residential: $35
Lancaster 8/01/10 75.2% $0
Lehigh 8/01/10 32.2% $0
Montgomery 8/01/10 56.1% Residential: $50
Philadelphia 10/04/10 32.7% $0
York 8/01/10 79.9% $0
* The information provided is subject to update and not intended to be relied upon.
Please check with your local County Assessment Office before acting upon it.
4. Gather your evidence
Be prepared to present your case at the hearing. Usually, there are three members present at a tax appeal hearing. The local tax assessor attends the hearing and presents their evidence to support the TOTAL ASSESSMENT. You should always present the best case possible using the evidence. Attempting to save money by not getting an appraisal or cutting corners is not the best approach since your assessment will always determine the amount of taxes you pay. Plan to discuss the characteristics of the comparable home sales in the neighborhood as they compare to the characteristics of your home.
Total Square Footage of the home
Total lot size
Total Baths and half baths
Garages, finished basements, sun rooms, etc.
The overall condition of the home
Be aware of comparable values that are due to short sales or foreclosures. These are not good indicators of FMV since they are not considered arm’s length transactions.
Of course if you are not comfortable presenting a tax appeal case, you can always contact my office and receive a free consultation to determine if your property’s assessment can be appealed.
Please call 215-969-9933 for a free analysis.