Paying The Property Tax Bill............No "Tip" Necesary!

Taxes, something we all have in common, something we dred and something we are preparing for right now.
Morgan Stanley got it right when they released an advertisement stating, "You must pay taxes. But there's no law that says you've gotta leave a tip." Yes, you'd probably be hard pressed to find someone who feels that they pay too little taxes or would voluntarily pay a little extra.  Most of us spend this time of year organizing, calculating, and tabulating, hoping and wishing for the illusive tax refund.  While there's not much you can do about the past year, you can take proactive steps now to reduce your property tax burden for the upcoming year.

What is Property Tax?
Every parcel of land, and any improvements (structures) thereon is "assessed", or valued, by a state certified assessor under the direction of the County Assessment Office. The value that is placed on the property will determine how much tax you will pay.
Property tax is used as a source of revenue by county government, school districts and most of the municipalities in Pennsylvania to pay for public services.

How is my tax determined?
Property taxes are calculated using the following equations:

Market Value X Assessment Ratio = Assessment

Assessment X Millage = Property Taxes

Market Value
The first number in the equation that you need to identify is your property's 'market value'. This value generally refers to what a ready, willing and able buyer might pay for the property in the current market. This value can be obtained either by hiring a professional appraisor or by doing a little leg work on your own and calculating it yourself.
If you opt to calculate this yourself, there are three steps to arrive at your value.
1) Identify a resource or website that can help you find recent real estate sales data for your area. E.g. local tax records websites or website of a local Realtor
2) Utilize your resource to find 3 homes that have sold near your home within the last six months. It is important to find recent sales, so that you are getting an accurate picture of the current market. These homes are called your "Comps" or Comparable Sales. Comp homes should be in the same school zone, similar in size, type of construction and have the same features as yours.
3)Calculate the average sales price of the three homes. Once you have an average price, you'll want to determine a dollar amount, or "Adjustments", for any upgrades or amenities that your property has that the others don't. Conversley, if your home is missing something that the others have then you want to subtract a dollar amount from your home's value. Dollar amounts to add or subtract will vary, specific to your local area and you may need the help of a professional, like an Appraiser, Realtor or Tax Assessor.

Assessment Ratio or Common Level Ratio (CLR)
The CLR is determined by the PA State Tax Equalization Board (STEB) on an annual basis for each county. The CLR is an average of assessments to sale prices.
The Pennsylvania Department of Revenue provides an updated list of the CLRs for the state.  Click HERE to access the list for your county's specific ratio.


Millage Rate -The property tax rate is expressed as a per mil (amount of tax per thousand currency units of property value), which is also known as a millage rate or mill. To calculate the property tax, the authority will multiply the assessed value of the property by the mill rate and then divide by 1,000. To view the current Bucks County Millage Rates, click here.

When assessments are conducted the owner is mailed a "Change In Assessment" notice. All property owners have the right to appeal if they do not agree with the assessment of their property.

Appeals Process

Property owners have an opportunity to appeal their assessment once a year, the appeal must be filed on or before August 1 for any effective assessment change on January 1. By appealing, the property is open to the re-valuation process in which the property assessment may be lowered, raised or remain the same.  If the assessed value is less than the current market value, it may be best to leave the assessment figure alone, or the challenge could result in higher taxes.

If you choose to Appeal your Assessment, the first step is to submit an assessment appeal application - Bucks County Property Assessment Appeal, as found on buckscountyboa.org. The Assessment Office has implemented Resolution #1-2008 which requires a processing fee for each parcel appealed to the Board of Assessment Appeals. The fee for each residential property will vary by County, but is currently $35 for Bucks County.

 
The Appeal Hearing

Once your application has been submitted, you will be notified of a hearing date to review your case.  The property owner is requested to attend but if unable to do so, may send someone else to provide representation with a letter of authorization. If more than one person owns the property jointly it is not necessary that all the owners appear at the hearing.
The process is relatively simple, a residential hearing lasts about 5 minutes. The burden of proving to the board that the assessment on your home is incorrect rests with the property owners. The assessment will be presumed to be correct until the property owners come forward with credible evidence to prove otherwise.The property owner has the opportunity to present information such as a recent appraisal or recent sales documentation for sales "comps" in their area.  If the home was recently purchased, the settlement statement can be used as evidence of fair market value, to support the case.The property owner may also present other information that may have an impact on the value of the property.

The Board of Assessment Appeals may request that the property owner provide recent photographs (front and rear) of the property, including any recent physical changes to the exterior of the property.

Based upon the documentation provided by the property owner, the Board will determine a fair market value for the property. The Board will then by statute, apply the appropriate Common Level Ratio (CLR) to the fair market value to arrive at the new assessed value.

The Board generally renders a decision within 3-4 weeks of the hearing date and notifies the property owner in writing. All townships/areas differ in their appeal process so contact your local tax office/court house for timelines and process.

Please contact me if you are looking to apppeal your taxes as I help many people each year! Also, please contact me if you are thinking of buying or selling a home. There is a difference!