Should You Challenge Your Property Tax Assessment in Pennsylvania?

Homeowners in Pennsylvania must pay property tax each year to local taxing authorities. And opening your tax bill can be a cause for shock.

But by learning how property taxes are computed in Pennsylvania, you can investigate whether the assessed value of your home is too high and the basis of an excessive property tax bill. This article will help you determine whether you can or should take measures to have your property's value reduced. You might be able to knock some dollars off your property tax bill.

How Your Pennsylvania Tax Bill Is Calculated and Paid

In Pennsylvania, the amount you'll owe and the date when payment is due varies depending on the county where you live. Some counties allow you to make installment payments.

The amount of your Pennsylvania property taxes are determined by a combination of the following:

1. the taxable value of your home (determined by a county assessor), and
2. the applicable tax rate (the percentage of taxable value that local tax authorities use to compute property tax).

In addition, you might qualify for some sort of exemption (tax break), such as a "homestead exemption" or one based on disability for low-income veterans.

The property taxing process begins when the county tax assessor determines your home's taxable value. In Pennsylvania, the taxable value of a home is a percentage of its "actual value"—basically, what the home would sell for on the open market.

Not surprisingly, major cities such as Philadelphia tend to have higher property taxes than rural counties. You cannot do much about the tax rate except to vote wisely for the elected officials who determine it, and carefully consider revenue issues that appear on the ballot.

When it comes to the taxable-value factor, however, you have more leverage. If the taxable value assigned to your home is too high, you might be able to get it reduced. A mere $500 reduction in your annual tax bill would add up to $5,000 in savings over a ten-year period.

Consider this example: Larry and Joan own a home in Pennsylvania. The county tax assessor has placed a taxable value of $400,000 on the property. The local tax rate is $10 for every $1,000 of taxable value. This means that their annual property tax is $4,000. After researching recent sales of comparable homes, Larry and Joan d conclude that the taxable value of their home should be $350,000. They successfully appeal their assessment. Now, their tax bill is $3,500 a year instead of $4,000.

Contact information for your county tax assessor is available by calling your county government office or checking online. (Search for "[name of county] property assessor or assessment office" or navigate via this list of the 67 Pennsylvania counties.)

How to Check the Official Tax Record for Your Home

The tax record for your home might contain inaccurate or incomplete information, which would then lead the county tax assessor to place too high a value on it. You can obtain a copy of your property tax records from your county's tax assessor's office. Review it for errors and check the following:

• Is your home correctly classified as residential property?
• Is the size of your home and the lot it sits on correctly stated?
• Does the record accurately list the number of bedrooms and bathrooms?
• Does the record list improvements that were not actually made?
• 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?

If you spot incorrect or incomplete information, let the tax assessor know. That way, the record can be corrected and the taxable value adjusted. But even if the tax record is accurate, you might disagree with the tax assessor's conclusion regarding the market value of your home. In that case, you will need to do more.

Gather Information About Whether Your Home Has Been Fairly Valued

Two types of information can help establish that a Pennsylvania county tax assessor has placed too high a taxable value on your home. The first (and most important) is how the assessor has treated homes similar to yours. The second is how much homes like yours are currently selling for within the geographic area.

Taxable Values of Similar Homes

Review the assessment records for homes in your community that resemble yours. Contact the tax assessor's office to find out how you can access these records. Finding comparable homes will take time and effort, but can be worth it if you believe that your home is truly over-valued. Look for homes that have approximately the same square footage as yours and are located in the same neighborhood or a nearby one. If similar homes have a taxable value lower than yours, this is strong evidence that you're over-assessed.

Consider this example: Derek and Liza own a three-bedroom ranch-style home in a subdivision with many homes like theirs. The taxable value of their home has been set at $375,000, which they suspect is too high. They check the records for a dozen similar homes in their subdivision and discover that the average taxable value of those homes is $340,000. What's more, most of the other homes have finished basements, while Derek and Liza's doesn't. Derek and Liza have good evidence for claiming that the taxable value of their home is higher than it should be.

Sale Prices of Similar Homes

If you bought your house recently, the price you paid is excellent evidence of its current value. Regardless of when you made the purchase, you should gather information about recent sales prices of similar homes in your community.

For guidance, read Listing Your House: What List Price Should You Set? Online resources such as Zillow can also be useful, though anything but definitive, since the data is based on limited public data run through an algorithm.

Try not to rely on transactions in which the buyer purchased a home from a relative, or at a foreclosure or property tax sale. The sales prices in such transactions might be artificially low and won't be convincing evidence of true market value.

Also consider asking an experienced real estate broker to give you information about recent home sales in your area, derived from the Multiple Listing Service database. You might need to pay a modest fee for such assistance.

If the stakes are high, you can hire a real estate appraiser to visit the house and provide a written report, though this will be more expensive. A local lender or real estate broker may be able to recommend a qualified appraiser. If not, visit the Appraisal Institute.

Importantly, if you recently refinanced your home or took out a home equity loan, the lender probably ordered a professional appraisal. Obtain a copy of it. It might give you powerful ammunition in your quest for a reduced taxable value. Then follow the instructions from your assessor's office for filing an appeal.