A Change for Tax Appeals

Can you explain what is going on in Allegheny with property tax assessments?

It’s big news! For property tax appeals in 2023, the PA State Tax Equalization Board has set the common level ration at 63.6%.  This is dramatically less than the 81.6% in effect for 2022.  What this means is that for homeowners appealing their property taxes in 2023, the tax assessment should be set at 63.6% of the property’s 2022 value.  This is great news for people buying their homes in 2022.  Buyers have grown accustomed to having their property tax assessment appealed after they purchase their home, and these increased assessments can dramatically impact the monthly cost of owning their homes.  This often impacts the sale-ability of a home as buyers often worry about that their monthly payments might increase to, but with new common level ratio, it is a big break for new home buyers.

For example, a home selling for $1million in 2022 should have a tax assessment of $636,000, which is an outstanding possibility.  Likewise, a home selling in 2022 for $500,000 should have a tax assessment of $318,000.

Of course, buyers in previous years could consider appealing their tax assessment as well.  For example, if a home was purchased in 2021 for $500,000, applying the current year percentages, it might have an assessment of $408,000.  We did see dramatic appreciation in 2022, so that home might be worth $550,000 today, but applying the 2022 ratio of 63.6% to 2022 value could result in an assessment of $350,000 which would generate potential tax savings of approx. $1500.   Any recent homeowners may want to consult their tax advisors as to whether it makes sense to appeal their tax assessment based on this new information.

The potential concern here is for the taxing bodies.  The services we all depend upon require tax revenues to be funded.  With the potential erosion of tax bases, this new common level ratio will be a victory for new homeowners, but we may all end up paying more in taxes due to the increased millage rates that may be required to compensate for declining tax bases.