If so, you can potentially save money year after year by reducing your real estate taxes, while helping to make your home more marketable.

Homeowners and potential buyers in Pennsylvania generally know that they need to pay property taxes on their real estate, that there are two bills they get each year (one for local/township/county, and the other for their school district), and that these taxes at least feel like they are quite high.  Beyond that, real estate taxes can be a mystery.

Your real estate taxes (both bills) are based on the “assessed value” of your property and the “millage rate”.  The millage rate is basically the tax rate that varies by municipality and county, and is the amount of tax per $1,000 of assessed value.  In other words, millage rates are expressed in tenths of a penny.

Assessed Value vs. Actual Dollar Value (Fair Market Value)

The assessed value of a property is different than its actual dollar value or market value.  The assessed value generally will only change when there is construction done, permits made for work, an entire county is re-assessed (like Philadelphia recently), or the assessment is appealed.  To translate the county’s assessed value of your property, you can multiply it by the “common level ratio” which varies by county and is updated annually to reflect overall average increases or decreases in real estate market values.  The number you get is the county’s approximate current dollar value of your property.

Assessed values are not generally changed when a home is purchased or sold, so they may not reflect a home’s actual market value.  If your home is worth less than that number, there may be room to appeal your taxes with your county’s Board of Assessment Appeals to reduce your property’s assessed value based on its current market value.  Put simply, if your home is 10% over-assessed, and you win the appeal, your assessed value will decrease by 10%, and your taxes going forward will be 10% less, and any increases in taxes due to increased millage will be 10% less than they otherwise would have been.  Additionally, mortgage companies factor real estate taxes into approvals of new loans and refinancing, so if you reduce the taxes on a home for sale, it could not only be more attractive to potential buyers, but it would also help with financing (or refinancing) by decreasing the monthly costs of ownership; that can also increase the pool of potential buyers who could get approved for a mortgage to purchase your home.

Examples of other ways to decrease your real estate taxes, in addition to real estate assessment appeals, include the Homestead Exemption, the Farmstead Exemption, and the Nonprofit Exemption.

Please contact Davis Law if you have any questions or if you would like to set up a FREE analysis of your real estate taxes.

In Bucks County, Montgomery County, Chester County, and Delaware County, Pennsylvania, annual real estate tax appeals are due August 1, 2017 for residential properties and commercial properties.  Interim property tax assessment appeal deadlines vary.

Marshal H. Davis, Esq., MBA, LLM is an attorney based in central Bucks County, PA and is licensed to practice law in Pennsylvania and New Jersey.  Marshal is the CEO of Davis Law (www.MHDesq.com).  His primary practice areas include business and corporate law, non-profit law, tax-exempt entities, real estate tax appeals, and other transactional work.  In his spare time, he coaches fencing at Liberty Fencing Club LLC in Warrington, PA. Follow attorney Marshal Davis on LinkedIn at https://www.linkedin.com/in/marshalhdavis