As I wrote about two weeks ago, Philadelphia property owners are in for a tax hike effective for tax year 2019. No, not the 4.1% tax rate increase that is being proposed by the Mayor and currently under review by City Council—that increase will come on top of the backdoor tax hike resulting from upward revisions by the City's Office of Property Assessment to property assessments. The Mayor adjusted next year’s proposed property tax increase downward, from 6% to 4.1%, due to the OPA's assessment increases, which, on average, were around 11%. However, the administration failed to address the somewhat crucial detail that the "average" assessment increases the administration referred to did not take into account the 70-200% increases that some individual property owners will see. This is quite evident now that that actual numbers are publicly available, and, predictably, many taxpayers are not happy.
I will continue to write in more detail about the OPA's assessments and the outcome of City Council's budget hearing process (information on which can be found here and here) up through the deadline to appeal the 2019 assessed values (October 1, 2018). However, here are some things that both commercial and residential property owners should keep in mind:
First, for commercial property owners, the City is taking a new approach to assessing commercial construction and reassessing such projects midway through completion. Such mid-project assessments not only are fully taxable, even if the developer has applied for an abatement, but are (improperly) calculated like a bank would value a development project for financing, rather than according to how the incomplete structure would actually sell on the market. Because ad valorem taxation valuation is not the same as valuation for financing, the City’s approach does not make sense and may be challenged.
Second, both commercial and residential property owners whose properties are newly constructed or renovated should pay attention to the City’s allocation of value between the building and the land, particularly if such properties have an active tax abatement. The City has been taking the position in recent years that improvements to a property increases the value of the underlying land. This not only reduces the value of any tax abatement on that property but can have a constitutionally non-uniform effect that can be legally attacked to attain a reduction in the property's assessed value (and, consequently, a tax reduction).
Third, residential property owners should be aware that (A) some reassessments appear to be wildly inaccurate, (B) any uniformity (i.e., fairness) argument should address other neighborhoods in the City, not just your own, (C) if your property is assessed over $1 million, the Board of Revision of Taxes may require you to pay for an appraisal (roughly $300-$500 for residential properties) in order to lodge an appeal, though that internal rule is wholly unsupported in law and should be challenged, and (D) the City's reassessments have inadvertently removed some properties’ homestead exemptions—though that can be easily remedied by reapplying here. I will write more about the first two points in later blog posts.
Overall, it seems as though the City is going to be quite busy with assessment challenges this year, even though the information on its website reflects outdated information (as of April 9, 2018) for last year's assessments and no information on first level reviews or appeals for this year's assessments. If you need further assistance in dealing with your property's reassessment, you can find out how to contact me to discuss specifics here.
UPDATE: As of April 19, 2018, the City's website includes current information regarding the 2019 assessments.
DISCLAIMER: Nothing in this blog is intended or should be construed to constitute legal advice, and readers should not rely on it to solve their individual legal issues. No opinion set forth is endorsed by any law firm and is the sole opinion of the author. For help with any present legal issue, please consult a licensed attorney and do not rely merely on anything set forth in this website.