United States: City Of Philadelphia Tax Year 2013 Real Estate Tax Rate Increase; Actual Value Initiative Update; And Homestead Exemption Alert

Last Updated: July 24 2012
Article by Peter Foster Kelsen and Adam E. Laver

Following months of speculation and debate, the City of Philadelphia has officially postponed implementation of the Actual Value Initiative ("AVI") until Tax Year 2014. However, in the interim, for Tax Year 2013, the City has increased the tax rate by 3.6 percent—it will be $97.71 per $1,000 of assessed value, an increase over the 2012 rate of $94.32 per $1,000 of assessed value. Read on to learn more about critical issues and timelines for 2013 real estate taxes, the rollout of AVI, the Market Value Appeal process, and Homestead Exemption Application Deadlines. 

City of Philadelphia Tax Year 2013 Real Estate Tax Rate Increase:

For upcoming Tax Year 2013, based on recently passed City Council legislation, the City of Philadelphia will be using values certified for Tax Year 2011 to calculate tax bills, with adjustments for subsequent improvements, demolition and destruction (if applicable). According to the Office of Property Assessment (OPA):

  • Most properties in Philadelphia will experience no change in value from 2012.
  • Approximately 25,000 properties are estimated to have a change in value and are expected to receive a notice in late September 2012 with the new value. Properties with no change in value will not receive a notice.
  • Tax Year 2013 appeals must be filed no later than the first Monday in October (October 1, 2012)or thirty (30) days from the date on the Assessment Change Notice, whichever date is later.
  • Tax bills are expected to be mailed, as usual, in December, with payment due March 31, 2013 (with a 1% discount if paid by February 28, 2013).
  • Tax Year 2013 bills will be calculated based on the following formula:
    • Certified Market Value x 32% (pre-determined ratio) x 9.771% (tax rate).
    • The tax rate has increased by 3.6% compared to Tax Year 2012.

Tax Year 2014 Actual Value Initiative Update:

According to the OPA:

  • The City of Philadelphia will be moving to property assessments based on Actual Values for Tax Year 2014.
  • The OPA will mail property owners notices of assessment change in February 2013 to alert them to the new values.
  • These values should be based on the market value of the property, which means the value that the property would sell for on the open market.
  • If a taxpayer believes that the new value is incorrect, he/she can request an informal review by the OPA evaluator who initially assigned the value. Taxpayers will have an opportunity to provide additional information to the evaluator for consideration. The evaluator will adjust the value if appropriate. If, after the informal review, the taxpayer believes that the value is too high, formal appeals may be filed to the Board of Revision of Taxes by a date to be established.
  • With the implementation of the Actual Value Initiative, the formula for calculating real estate tax bills will be simplified to Certified Market Value multiplied by the Tax Rate (to be determined), removing the fractional basis for calculations. The 2014 Real Estate Tax Rate is expected to be published by May 31, 2013.

Homestead Exemption Alert:

Beginning in Tax Year 2014, the City of Philadelphia is introducing a new partial-tax-relief program for homeowners called the Homestead Exemption, in which any homeowner who uses the property in question as his/her primary residence is eligible for the exemption. Under the Homestead Exemption Program, the assessed value of each eligible homestead is reduced by the amount of the homestead exclusion (expected to be $30,000) before the real estate tax is computed. Applications for Homestead Exemption that have already been submitted will be processed and held for Tax Year 2014 and future years. Those who have not already applied should receive an application in the mail in early September 2012. Applications received by November 15, 2012 will be reflected on the Assessment Change Notices going out in February 2013. Applications received after November 15, 2012 may not be shown on the Assessessment Change Notices. The Homestead Exemption program will not be in effect for Tax Year 2013 and applications do not have to be submitted by July 31, 2012, as previously announced by the City. According to the OPA, the application deadline is now November 15, 2012 for Tax Year 2014 eligibility.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Adam E. Laver
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