Are the real property taxes assessed against your property out of proportion to the actual value of your property?  If so, what should you do?

First, you need to determine if you have a basis to file an appeal to the county board of assessment for your property. To do so, you need an experienced real estate assessment attorney and a qualified appraiser.

On commercial and industrial properties, as well as rental residential properties, two calculations often make the determination if you should file a tax appeal. Capitalization of income and comparable sales gives you the ability to make a preliminary determination as to whether a particular tax assessment is out of line.

The capitalization of income approach is the easiest and quickest test to determine the value of your commercial property.  Up to date information on rents, expenses, square footage and occupancy are all necessary to complete the capitalization approach. As to comparable sales, it is important to determine whether the sale is an arm’s length transaction and not mortgage foreclosure or insider transfer. For residential properties, the most reliable determination is comparable sales of similar homes within a reasonable distance from the subject property.

With the above in mind, now is the time of year to review your real estate tax assessment on any and all property owned. If the market value utilized by the board of assessment exceeds the market value of your property, or if you have experienced rental income problems over the last few years, then a tax appeal may be in order. We can help you make that determination.  In Pennsylvania, appeals in Bucks, Chester, Delaware and Montgomery Counties need to be filed on or before August 6, 2018. The deadline for filing an appeal in Philadelphia County is October 1, 2018.

The first step to determine if you have a basis for a tax appeal is to take your property assessment and divide it by the common level ratio from the County where the property is located.  For example, in Bucks County, the current common level ratio (which will change on July 1, 2018), is .109.  So, if your assessment is $500,000, then the County is saying that the fair market value of your property is $4,587,155 ($500,000 / .109).  If it is worth less than that amount, then you may have a case to file a tax appeal.  We handle this work on a contingent or hourly basis.

If you would like more information, please contact Rob Gundlach at 215-918-3636 or rgundlach@foxrothschild.com.