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.

In a recent Supreme Court of Pennsylvania case, captioned as Valley Forge Towers, taxpayer brought an action against the school district, as a taxing district, seeking declaratory and injunctive relief claiming that the school district violated the uniformity clause of the Pennsylvania Constitution by systematically appealing only assessments of commercial properties. The Montgomery County Court of Common Pleas sustained the school district’s policy and dismissed the complaint. The taxpayers appealed to the Commonwealth Court of Pennsylvania who affirmed the lower court’s decision. The PA Supreme Court accepted the appeal to address the question of whether the uniformity clause of the Pennsylvania Constitution permits a taxing authority to selectively appeal only the assessments of commercial properties, such as apartment complexes, while choosing not to appeal the assessments of other types of properties- most notably, single family residential homes (many of which are under assessed by a greater percentage than commercial properties). After discussing previous court precedent and the specific facts of this case (i.e., the school district’s concentration solely on the appeal of tax assessments on commercial properties), the Supreme Court found that taxpayer’s complaint set forth a valid claim that the school district’s tax assessment appeal policy violated the uniformity clause. The court reversed the order of the Commonwealth Court and remanded the matter back for further proceedings. The Supreme Court did note, however, that nothing in the opinion should be construed as suggesting that the use of a monetary threshold or some other selection criterial would violate uniformity if it was implemented without regards to the type of property in question or the residency status of its owner; noting that such other methodology was not before the court. I suspect that this decision will not be the “last word” on the subject of school district tax appeals under Section 8855 of the Consolidate County Assessment Law (giving taxing authorities the same right as taxpayers to appeal tax assessments set by the County). If we can be of assistance with your PA real estate tax appeals, or the defense of tax appeals filed by a taxing authority, please contact Rob Gundlach at (215) 918-3636, or rgundlach@foxrothschild.com.

April, 2017

Are the real property taxes assessed against your property by the county board of assessment for county, municipality and school district taxes out of proportion to the actual value of your property or the value attributable to your property by capitalizing the income you receive from the property?

What Should You Do If You Think Your Real Estate Taxes Are too High?

First, you need to determine whether 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 as to whether or not to appeal. Capitalization of income and comparable sales gives us 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 property. The comparable sales approach requires information from an appraiser. Up to date information on rents, expenses, square footage, occupancy, necessary to complete the capitalization approach. As to comparable sales, it is important to determine whether the sale is an arm’s length sale or was the result of a mortgage foreclosure or workout agreement. For residential properties, the most reliable determination is of course 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 is inconsistent with the market value of your property, or if you have experienced rental income problems over the last few years, then an appeal to your assessment this year may be in order. We can help you make that determination in short order. In Pennsylvania, appeals in Bucks, Chester, Delaware and Montgomery Counties need to be filed on or before August 1, 2017. The deadline for filing an appeal in Philadelphia County is October 2, 2017

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