The property tax system in the city has been a maddening crapshoot for decades, with property assessments veering wildly from reality and property tax bills seeming to have been drawn up by a math-deprived robot. That was all supposed to be fixed when City Council passed the Actual Value Initiative in 2013; that would improve the assessment process.
Now, it appears to be déjà vu all over again. Last week, the Philadelphia Inquirer and Daily News analysis of the recent value assessment of Philadelphia homes revealed that more than 35 percent of homes in the city — more than 165,000 — are assessed for far more than they are worth. If a home is over-assessed, the homeowner is required to pay more than their fair share in property tax.
Indeed, in April, when the city notified homeowners of the assessed value that will be used to calculate their 2019 tax bill, many homeowners saw their tax bill increase significantly. The median bill increased by $165 — but some saw their bill more than double . Some of the increase is due to increase in property values. The new Inquirer's analysis suggests that there could also be errors in the assessment process.
The city stands by the assessment. The State Tax Equalization Board — an independent body — compared sale prices of properties to the assessed value of the previous year — the figures for Philadelphia are extremely close.
When the new assessed values were released in April, City Council was also skeptical and hired a firm to audit the city's assessment. The report is expected to come out in September. The report should be made available to the public and the city should be prepared to respond by prorating tax bills if it finds errors in assessments.
Even if the assessments are correct, the increases in tax burden for many are substantial. The city should do more to help. For example, to help phase-in the tax increase for homeowners in booming neighborhoods, New York City caps the maximum amount a property tax bill can increase in a single year at 6 or 8 percent, depending on property type. Further, in New York, the assessment process is revenue neutral, meaning that the reassessments change the relative portions that each households pays and not the total amount of property tax revenue.
The deadline for homeowners wanting to make a direct appeal to the office of property assessment has passed. Starting next year, the city should extend the appeal period. Meanwhile, homeowners can file a formal appeal with the Board of Revision of Taxes by October 1.