Homeowners in Pennsylvania must pay property tax each year to the local taxing authorities. The date when payment is due varies depending on the county where you live. And some counties allow you to make installment payments.
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 describes the tax assessment process in Pennsylvania, and will help you determine whether you should take measures to have its value reduced. You might be able to knock some dollars off your property tax bill.
In Pennsylvania, property taxes are determined by two factors, as provided in 72 P.S. § 5020-201:
Below is an overview of these factors.
The property tax assessment process begins when a local public official, known as 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.
The Pennsylvania State Tax Equalization Board sets the percentage each year; it can vary among counties, but never exceed 100%. The percentage figure is also known as the "assessment ratio."
Imagine that the taxable value of your home is $300,000 and the tax rate is $10 for every $1,000 of taxable value. Your property tax for the year will be $3,000 (300 x $10 = $3,000).
Because local officials set the tax rate, it varies depending on where you live. Not surprisingly, major cities such as Philadelphia 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 $500 reduction in your annual tax bill, for example, 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.)
The tax record for your home may contain inaccurate or incomplete information, which then leads 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, either in person or possibly online; call your county government or check its website.
Review the tax record for errors. Among other things, check the following:
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 may disagree with the tax assessor’s conclusion regarding the market value of your home. In that case, you will need to do more.
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.
Review the assessment records for homes in your community that resemble your own. 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 preferably 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.
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.
Finding these sales prices may take some doing. For guidance, see Listing Your House: What List Price Should You Set? Online resources such as Zillow can be useful, though anything but definitive, since the data is based on limited public data run through an algorithm.
Try to avoid transactions in which the buyer has purchased a home from a relative, or at a foreclosure or property tax sale. The sales prices in such transactions may 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 website, an organization that allows you to search for a professional assessor by zip code.
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 may give you powerful ammunition in your quest for a reduced taxable value.
After investigating the taxable value of your home, you might conclude that the number set by the county assessor is too high. To find out what measures you can take to reduce the taxable value, check out the Pennsylvania Department of Revenue's publication, Pennsylvania Property Assessment: A Self-Evaluation Guide.