- Philadelphia Tax Assesment Appeal Alert
- September 19, 2011 | Author: Michael P. Weinstein
- Law Firm: Obermayer Rebmann Maxwell & Hippel LLP - Philadelphia Office
A recent change by the Pennsylvania State Tax Equalization Board (STEB) in the City of Philadelphia’s Common Level Ratio (CLR) makes necessary a review of a property owner’s real estate tax assessment in order to determine the necessity for filing an appeal of that assessment to the Philadelphia Board of Revision of Taxes (BRT) before the October 3rd filing deadline.
Based on the recent change made by the STEB, for appeals filed by October 3rd, the BRT is required to use the STEB’s new CLR of 18.1%, instead of the long-standing CLR of 32%.
The implications of the application of the new CLR can be illustrated as follows: An owner’s property in the City which has a fair market value of $1 million will be assessed at $181,000, or 18.1% of the property’s fair market value, under the new CLR. At the current tax rate of 9.082%, the tax payable would be $16,438. Conversely, an assessed value which is based on the old CLR of 32%, or $320,000, would give rise to a tax of $29,062. In fact, application of the old CLR of 32% is what a property owner’s current tax bill would reflect. Thus, by applying the new 18.1% CLR to the $1 million property mentioned above would result in a reduction of the tax by 43%.
It does not necessarily follow that it is in the interest of every property owner to appeal the 2012 assessment because any appeal opens the door for the BRT to establish a new, likely higher, fair market value for the property, which could actually result in an increase in the property owner’s tax bill for 2012.
On the other hand, it might make sense to appeal in the case of certain highly-priced commercial properties. For example, a $100 million high-rise might now be valued at $80 million by the BRT, resulting in a $2.33 million tax bill based on the application of the old CLR of 32%. If that property owner were to appeal and the City asserts that the high-rise should actually be valued at $100 million for tax purposes, that tax bill based on the application of the new 18.1% CLR would still go down by $690,000.
As noted above, the only way to reduce an over-assessment of one’s property is to file an appeal with the BRT by October 3rd. Any change from an assessment appeal filed by October 3rd will be effective for Philadelphia taxes imposed for the 2012 calendar year.