Philadelphia Tax Alert
To Our Clients and Friends:
Fineman Krekstein and Harris, P.C. is the premier law firm helping Philadelphia real estate owners avoid onerous and inaccurate City of Philadelphia taxes. We are proud of our recognized record of achievement.
Over the last year, there has been uncertainty regarding Philadelphia real estate taxes for tax-year 2013. Recently enacted state legislation along with unsettled and shifting budget discussions at Philadelphia City Council have added to the confusion. Accordingly, we have summarized below some frequently asked questions, along with some recommended actions:
1. What should I do to protect my real estate interests?
As a result of the recession, the City’s assessment of your property/properties may be overvalued. You should carefully review the market value of any property subject to Philadelphia taxes. To determine the City’s current assessed value of any property, go to the Office of Property Assessment (“OPA”) website (opa.phila.gov), or the information may be found on your tax bill. If you believe the City’s assessment overvalued your property, assemble documentation of income and expenses along with any recent appraisals and contact David Fineman (215-893-8701) or Gary Krimstock (215-893-8722) at our office. They can review and evaluate your case for a potential tax appeal before the October 1, 2012 filing deadline.
2. What is the current status of the Philadelphia real estate tax system?
Prior to 2012, the state-established ratio of tax assessment to market value had been set at 32%. The State Tax Equalization Board (STEB) lowered the Common Level Ratio for Philadelphia for tax-year 2012 to 25.2%. For the 2012 tax-year, only those properties for which an appeal had already been filed were eligible to seek the 25.2% ratio. The City is contesting all of those appeals in Court. As a result of recently enacted state legislation, the ratio will return to 32% beginning for the 2013 tax-year, the same ratio that was applied to all properties in Philadelphia for the 2011 tax-year.
3. Will I see an increase in my assessed value?
The City is committed to implementing the Actual Value Initiative (AVI). AVI is a uniform property tax method that assesses properties at actual fair market value. Obviously, depending on the tax rate that the City applies, those properties that have historically been significantly undervalued may suffer a dramatic tax increase in tax-year 2014. Most commercial properties in Philadelphia, and residential properties in the greater Center City area, as well as certain other neighborhoods, are undervalued for tax assessment purposes. We do not expect these changes to occur for the 2013 tax-year, the AVI is likely to be implemented for tax year 2014.
4. How do these changes affect my primary residence?
As a result of recently enacted state legislation, the Homestead Exemption will not be phased in until the actual value initiative is established in the 2014 tax-year. There has been notice from many sources, encouraging property owners to file for the Homestead Exemption for principal residences in Philadelphia. Filing details and requirements will be announced when they have been finalized, and including the amount of the Exemption.