Pennsylvania Property Tax

Property Tax Experts

For taxpayers who may be experiencing difficulty in paying their property taxes,
there may be help. Most cities in the United States have Property Tax Poverty
Exemption Policy and Guidelines. You may be eligible to waive your annual property
tax for one year read more

NANTICOKE — Governor Edward G. Rendell today signed Special Session House
Bill 39 (SS HB 39) into law at the home of Nellie Hughes, which will completely
eliminate the Nanticoke woman’s property tax burden, as well as property taxes for
hundreds-of-thousands of seniors. SS HB 39 delivers the largest property tax cut in
Pennsylvania history – $1 billion annually to all Pennsylvania homeowners. Read
Full Article

GOVERNOR RENDELL SIGNS BILL TO DELIVER LARGEST
PROPERTY TAX CUT IN PENNSYLVANIA HISTORY
$1 BILLION CUT WILL BE DELIVERED TO PENNSYLVANIA HOMEOWNERS;
SENIORS WIN BIG

Pennsylvania Homestead/Farmstead Exclusion - Act 50:

Passed in 1998 lets participating counties to offer property tax reductions on their
primary residence. To recieve the discount you need to file a homestead or farmstead
exclusion with your local assessors office.

Valuation of Property

Pennsylvania assessment laws require that real estate be valued according to its
“actual value” and at a bona fide rate and price for which the property would
separately sell. The courts have interpreted actual value to mean market value.
Market value has been defined by the Pennsylvania State Supreme Court as “the
price in a competitive market a purchaser, willing but not obligated to buy, would pay
an owner,willing but not obligated to sell, taking into consideration all the legal uses
to which the property can be adapted and might reasonably be applied.” To establish
the “actual” value of property, the county may use current year market values or it may
adopt a base year for market values. For the most part, properties are assessed at a
set percentage of base year values. Property is only assessed at current market
value when a countywide reassessment has been conducted and implemented.
Unless a county reassesses all properties every year, the property assessments will
be predicated upon base year values (the last year in which the county reassessed).
The same methodology must be used to value property throughout the county; that is,
when a county adopts a base year for market value, then all property in the county
must be valued as of the same base year. The assessment laws state that “the price
at which any property may actually have been sold in the base year or the current tax
year is to be considered but is not controlling. Such selling prices can be increased
or decreased as part of the valuation process to accomplish equalization with other
similar property within the taxing district.” Recent sales of comparable properties, that
is, properties of a similar nature, are persuasive but not conclusive in helping to
establish the market value. The properties selected need not be identical. The sales
prices, however, are useful in showing relative values by bringing out characteristic
qualities, whether similar or divergent.

Comparison based on sales may be made according to location, age, income,
expense, use, size, type of construction and in numerous other ways.
When valuing property, three approaches must be considered in conjunction with one
another; they are cost (reproduction or replacement, as applicable, less depreciation
and all forms of obsolescence), comparable sales, and income approaches.
Although all three approaches must be considered, they do not all have to be used in
arriving at the final valuation of the property. The approach used may differ depending
upon the type of property involved (e.g., commercial, residential, income-producing).

Calculating the Tax Bill

Once the market value of the property is established, then the county predetermined
ratio is applied to the value to determine assessed value. The board of county
commissioners in each county is empowered to set the county predetermined ratio.
This ratio of assessed to market value may not exceed 100 percent. The county
predetermined ratio is then applied to the base year value or the current market year
value to calculate the assessed value of properties throughout the county.
An assessment, then, is a percentage of the market value of the property. The
assessment is the foundation which the taxing authorities use to determine the
amount of real estate taxes based on their tax rates.

For example: If the current market value or base year value of Property A is $100,000
and the county’s predetermined ratio is 40 percent, then the assessed value is
$40,000 [$100,000 x 40 percent].
Hypothetically, the county may levy five mills for the real estate tax; the township in
which the property is located may levy ten mills for the real estate tax; and the
coterminous school district may levy 20 mills for the real estate tax. The owner of
Property A would, therefore, be liable to pay real estate taxes in the
amounts of $200 to the county [$40,000 x .005], $400 to the township [$40,000 x .01],
and $800 to the school district [$40,000 x .02]. This is the general method by which
property is valued and assessed throughout the Commonwealth.

MARKET VALUE X COUNTY PREDETERMINED RATIO = ASSESSMENT
ASSESSMENT X MILLAGE RATE = TAX BILL

All properties within the taxing district must be “uniformly” assessed at a similar ratio.
This is necessary in order to satisfy the requirements of Article VIII, Section I, of the
Pennsylvania Constitution that provide that all taxes must be uniform on the same
class of subjects within the territorial limits of the authority levying the tax. The
controlling principle in matters of valuation is that no one taxpayer should pay any
more or less than their proportionate share of the cost of government. Equalization
may require periodic reappraisals of all parcels within the county, initiated at the
discretion of the county commissioners.

Until recently, Pennsylvania courts had upheld the statutory measure of assessment
uniformity using thecounty’s common level ratio last published by the STEB (see
definitions). In so doing, the courts had repeatedly stated that a taxpayer may not
successfully raise a uniformity challenge by comparing his or her
assessment-to-market-value ratio with assessment-to-market-value ratios of
neighboring properties. Uniformity was only to be determined by applying the STEB
ratio to the property’s market value in order to arrive at the correct assessment. On
December 27, 2006, the Pennsylvania Supreme Court held that courts were required
to examine evidence of the assessment-to-market-value ratio of comparable
properties in determining whether or not uniformity was violated, if such evidence
was presented. This case may raise concerns about the constitutional validity of
statutory provisions that preclude examination of comparable property in the appeal
process.

Appeal of an Assessment

The assessment laws afford to the property owner and the taxing districts the
opportunity to appeal an assessment to the county board of appeals (and,
subsequently, the court of common pleas, if applicable). In an appeal, the burden of
proof rests with the party bringing the appeal to produce sufficient, credible, and
relevant evidence as to the value of his property once the county board of assessment
establishes prima facie validity of its assessment by placing the record into evidence.
The law stipulates that an appeal does not prevent the collection of taxes upon the
assessment.

In any appeal, the board or court is required to determine the following:

The market value of the property as of the date such appeal was filed with the
board;
The common level ratio published by the STEB on or before the first day of July
of the year prior to the tax year being appealed to the board.

After determining the market value of the property, the county board responsible for
hearing assessment appeals must then apply the established predetermined ratio to
this value unless the common level ratio published by the STEB varies by more than
fifteen percent (15 percent) from the established predetermined ratio, in which case
the board shall apply that same common level ratio to the market value of the property.