What your assessment should represent

A key element in the amount of your property tax is your assessment. When your assessment is multiplied by the applicable millage rates, you get the amount of your tax bill.

You should not confuse your assessment with the actual value of your property. In most counties in Pennsylvania, your assessment represents only a percentage of what is ostensibly the actual value (fair market value) of your property. The percentage that applies is called the common level ratio. Because many counties do not regularly reassess the value of the properties in that county, the common level ratio is intended to address changes in property value that occur between assessments.

You can find the common level ratio for your county by going to the State Tax Equalization Board - click here for the webpage that will let you find the common level ratio for your county.

Thus, if your property is worth $400,000, and the applicable common level ratio is 64.2, your assessment should be $256,800.

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An initial step to take before deciding to file a tax appeal

Last week, I noted that there are two common situations (an overvalued property, or a catastrophic loss) in which you may wish to consider filing an appeal of your property taxes in Pennsylvania. In either case, there are some things that you must do before filing an appeal.

Particularly with a valuation appeal, it is critical that you do not file if you do not have a good chance of winning since, when you file a valuation appeal, the Board of Assessment can actually increase your assessment if it determines that your property is underassessed (assessed at less than its fair market value).

Before you file a tax appeal for a catastrophic loss, you must first determine if the damage to your property is more than 50% of its value. If your house burns down, the answer is obvious. However, if a tree falls through the roof, damaging one or two rooms, the answer is not so clear.

Similarly, with a valuation appeal, you must determine the fair market value of the property before deciding to appeal.

Want to pay less in real estate taxes?

In Pennsylvania, your real estate taxes are calculated by multiplying your assessed value (set by your county's Board of Assessment) by the millage rates that applies for your local governmental entities (depending on the county, the municipality, the county and the school district).

You can lower your tax bill by filing a successful property tax appeal.

Generally, you should consider filing a property tax appeal if:
1.  The value of your property has dropped; or
2.  The building on your property (whether it is your home or a commercial building your own) has been substantially damaged by a fire, flood or similar casualty, decreasing its value by 50% or more.

You can find more information on assessment appeals on our website by clicking here

I'll be posting more details and considerations.