Impact of property sale on your assessment

As I noted in a prior post, the county's assessment of your property (which you can find on your tax bill) should be a percentage of its actual value.  The percentage is determined by the common level ratio for the county in which the property is located.  The common level ratios for Pennsylvania counties can be found by clicking here.

An ideal time to evaluate your assessment is immediately after you purchase a new home or other property.  If the purchase was an arms-length transaction, the price you paid is probably the actual value of that property, or very close to it.  If you multiply the assessed value by the applicable common level ratio (percentage), you should end up with a number around the purchase price.

If you multiply the assessed value by the common level ratio and get a result that is significantly higher than your purchase price, the property is likely over-assessed, which means that you are probably paying too much in real estate taxes. You should thus consider filing a tax appeal.

For example, let's say you just bought a house in Chester County for $520,000 that is assessed at $400,000.  The present common level ratio for Chester County is 1.70.  When the assessment of $400,000 is multiplied by 1.70, it yields a value $680,000 - far more than the $520,000 that you paid.  The property would thus be overassessed.


Note that if you are appealing your annual assessment (in other words, if you are challenging an assessment that has been in place for a while, rather than one that was set following renovations or new construction), your appeal applies to the following calendar year.  Thus, in 2012, you could appeal your assessment for the 2013 tax year.

If you think your property is overassessed, you may wish to contact an attorney experienced in handling real estate tax appeals.  You always want to make certain that you are careful about filing an appeal since it opens up the assessment of the property to scrutiny and, in a worst case scenario, could result in your assessment (and thus your taxes) being increased.

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.