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May 12, 2016

Assessing your new property tax bill (and what you can do to appeal it)

If BRT just hiked your property taxes, here's the likely reason why and what you can do to appeal your assessment

Taxes Property Value
West Philadelphia Row Home Thom Carroll/PhillyVoice

Vibrant rowhomes with large porches are a common sight in West Philadelphia.

The city's Office of Property Assessment recently completed a reassessment of residential property in Philadelphia and sent out letters to property owners notifying them of changes to their property taxes.

Next, owners of vacant properties will be notified of their reassessments, beginning in early July. Vacant lots have long been considered to be underassessed, so these owners could be in for a shock when they get their property tax bill for next year. 

But about 85 percent of the 534,535 property owners who already have received letters heard good news: no change in their overall taxes, or perhaps even a decrease.  

That's not the case for everyone, however.

Some homeowners seeing their property taxes go up could be confused about why their property value changed, especially if they believe other residents in the neighborhood with similar homes aren't paying equivalent taxes.


After years of complaints about inappropriate assessment values for land across the city, in 2013 – for tax year 2014 – Philadelphia began the Actual Value Initiative to fix assessment values by focusing on taxing land and property in the city at market value. 

"I think it was pretty much known in the real estate business and taxpaying community that assessments were out of whack and we needed to do something to fix them. But, it's not an easy thing to do, because it represents a tremendous shift in the way things were done," said Michael Piper, chief assessment officer of the OPA, in an interview Thursday.

Before the AVI was in place, the city taxed homeowners at a rate of 32 percent of the market value. But this often led to confusion, Piper said.

"A lot of folks said they were confused about the way their tax bill was derived because there were several mathematical computations," he said. "In addition to that, it seemed to leave room for interpretation of, not only the market value, but what the tax rate should be." 

With the new AVI in place, as the OPA determines these values, property owners in the city – especially those who may have been paying taxes on land assessed at a lower value – could see their property taxes raise.


When Philadelphia evaluates property taxes for property owners – it's actually a combination of two values: the land value and the value of the "improvement" or building on that land. 

"A better way to look at this, I guess, is that it's not that the land values changed, it's that the assessed values that we had on the properties didn't indicate what the market had determined they should be," Piper said. "And, our basis for assessments is always sale prices."

Differences in values, he said – even for nearly identical properties – can result from "locational variables," such as a home's neighborhood, catchment for a desirable school, or proximity to a train station. Any of these factors can impact land values, he said. 

The OPA also looks at the size, condition and age of the structure when determining value for the improvement piece of the property tax. 

But why are property owners seeing changes now, after the initial assessments that were conducted during the first implementation of AVI? 

After looking at the results of AVI, Piper said that "in a lot of areas, particularly with residential properties, we saw that some of our land values were being assessed artificially low." 

Still, that first round of AVI increased property taxes for many homeowners. 

So much so, Piper said, that the OPA received the most appeals – more than 53,000 – in its history. Having to address that crush of appeals "pretty much stopped" the OPA's ability to move ahead with more assessments. 


"That was a historically, monumental year for appeals. We've never had as many appeals as we did that year," Piper said. "We expected a lot. In fact, we expected more than we had. Nevertheless, it was a tremendous effort to try to answer them all. The same people who are responsible for answering those appeals are the ones responsible for assessment work. So, we were a little crippled by the results of the first year."

And, they still aren't done assessing properties throughout the city. Last year, the OPA conducted further assessments.

"The reason we are doing this is because we like to make sure that all the real estate in Philadelphia is assessed accurately and uniform," he said. "Right off the bat [after the initial AVI assessments] we were seeing that the land values needed some adjustment that reflected what the market was telling us."

The results of those adjustments were released last month and letters regarding new tax rates went out to homeowners. Surely, some property owners will call foul again, so what can property owners do if they believe their latest assessment is unfair?


There are two options for appeal and they cover nearly any complaint a property owner may have with a new assessment.

The first option – a First Level Review (FLR) – is made to the OPA, and the May 20 deadline is looming.

An FLR allows property owners to request reconsideration of an assessment in three specific areas: accuracy, exceptions and abatements, and uniformity. 

Accuracy is an easy concern to address, Piper said. If a homeowner believes his property was assessed higher than the actual market value, that could be a reason for a FLR. As are concerns about an OPA assessor missing an exception on an existing abatement, another problem that is relatively easy to address, he said. 

"With 400,000 or so properties, we aren't always going to get them all right," he said.

The final area is uniformity – a concern that arises often when property owners dispute their taxes. In these cases, homeowners might agree their assessment is fairly accurate, but see a neighbor, in an identical home on an identical lot, paying a lower rate. 

"It's a better way of saying, 'I don't like the way you're treating me in relation to my neighbor,' " said Piper. "By the way, it's not a matter of diming your neighbor out, because, really, you're OK with his, you just want what he has."

In such cases of assessment envy, an assessor would take a second look at both properties.

Homeowners who are not satisfied with the FLR, or simply wish to forgo it, can make an official appeal to the Board of Revision of Taxes, which results in a formal hearing. The deadline to apply for an appeal is early October.

And what about those still paying taxes on vacant properties that remain undervalued?

"The answer is, that's a very good question, we have just not finished those yet," replied Piper. "I guarantee you for 2017 – which is the same year these assessment notices went out for – you will see changes, you will see revisions in the overwhelming majority for these 35,000 or so vacant land parcels."

Those property owners will find out in early July.