The deadline for appealing your 2014 real estate taxes is approaching

Many counties in Pennsylvania, including Delaware, Bucks, Chester and Montgomery counties, have established August 1 as the deadline for you to appeal the following year's real estate assessment.  The assessment is what is used to calculate your property tax bills; if the assessment is too high, you will pay too much.

Accordingly, August 1, 2013 is the deadline for filing an appeal of your 2014 taxes in many counties.

As I have mentioned before, you should not appeal your taxes unless you are confident that your assessment is too high.  In many cases, properties are actually underassessed.  Often, it is new construction, or houses built in the last few years, that are overassessed.

Since you probably just received your school tax bill, take a look at the assessed value that is listed on that bill.  Multiply the assessment by the common level ratio for your county.  (For 2014, it is 9.09 for Bucks County, 1.66 for Chester County, 1.35 for Delaware County and 1.58 for Montgomery County).  If the number seems to be more than you could get if you were to sell your property, you should consider an assessment appeal - either contact an attorney who handles assessment appeals, or else go the the Board of Assessment Appeals for your county for the forms and further details.

2014 assessment appeals

Since we are now in mid-March, people who live in Pennsylvania and own their own homes or other real estate should do a reality check to see whether they are paying too much in real estate taxes because their property is overassessed.

In order to complete this check, you need the following:

1.  A copy of one of this year's tax bills that includes the assessed value of your property.
2.  At least a rough idea of what your house or property is worth.
3.  The common level ratio factor that applies to the county in which your house or property is located.

The common level ratio factor is based on a ratio that is determined annually by Pennsylvania's State Tax Equalization Board.  It is supposed to represent the ratio of the assessed value to the actual value of the property.

To check of your assessment, multiply the assessed value of your property by the common level ratio factor that applies to your county.   Pennsylvania's common level ratio factors can be found at http://www.portal.state.pa.us/portal/server.pt/community/realty_transfer_tax/11417/common_level_ratios/580584. 

For Delaware County, for 2014, it is 1.39; for Chester County, it is 1.70; for Montgomery County, it is 1.61; and for Bucks County it is 9.26.

If the math gives you a number that is significantly higher than the actual value of your house or property (what it would sell for), you should consider filing a tax appeal.

In many counties in Southeastern Pennsylvania, the deadline for filing a tax appeal of your 2014 assessment is August 1, 2013.  If you miss this deadline, you will have to wait another year.  You should check with your county's Board of Assessment Appeals to confirm the deadlines, or consult a lawyer who handles real estate tax appeals.

Property taxes on new construction may be too high

Recently, I have been called by a number of people who have just received their assessment after buying a newly built house.  The assessments that they are receiving will often lead to high tax bills.

When a new house or other building is completed, the local Board of Assessment will issue what is called an "interim assessment" for that property.  Depending upon the county in which the property is located, the assessment should represent a percentage of the combined value of the real estate and the building; the percentage is determined by that county's common level ratio.  (The common level ratios for Pennsylvania counties can be found by clicking here).

You typically have 40 days to appeal an interim assessment; if you miss that deadline, you are stuck with that assessment until you can next file an appeal of the annual assessment.

In many cases, the interim assessment is correct since it is based on the purchase price contained in the deed that was filed when you bought the house.  However, there are times that the ratio has not been correctly applied and the assessment is too high.

Where it can become difficult for the Board of Assessment to correctly the value the property is when the real estate is purchased, and there is a separate contract for the construction of the house.  The construction contract is not filed as a public record, and the Board of Assessment thus does not know how much it cost to build.  It thus may put too high a value on the house, inflating your assessment and, thereby, your property taxes.

I thus recommend that any time you get an interim assessment, you carefully review the assessed value to confirm whether it is appropriate.

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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