Remember the real estate tax reassessment that occurred in Allegheny County over the past year or so? Allegheny County retained an outside expert to value all Allegheny County real estate parcels; the new assessments were supposed to reflect current market values as of January 1, 2012. Because of the sheer number of parcels involved, Allegheny County did not impose these new assessments until 2013.
For many property owners, the new assessments were much higher than anticipated and many commercial, industrial and residential taxpayers filed appeals to challenge their 2013 assessment. Still, some taxpayers may have — intentionally or because of other factors — ignored the assessment appeal process. Some owners may actually have seen their property decrease in value over the past few years.
These owners, however, have not lost the chance to engage in the appeal process. Under State law, owners of real property can file a tax appeal of their assessment each year. For 2014, in Allegheny County the period for filing tax appeals challenging the 2014 property assessment will begin shortly and continue until March 31, 2014.
Keep in mind several factors. Foremost, any assessment challenges filed now will only be effective for the 2014 tax year. So even if the reasons for an assessment decrease existed several years earlier you will not generally be able to have your 2013 (or a prior year’s) assessment decreased. But if property values in your area have been decreasing over the past few years — as reflected in comparable sales — you may want to consider an appeal. “Comparable” sales are the key: if you own a duplex, look at what other duplexes are selling for in your neighborhood.
If your property is income-producing, look at whether your expenses are starting to outstrip your property’s income. In some neighborhoods rents are steady, but utilities and maintenance keep going up. Or a major tenant with a favorable lease vacated the property. Remember, under an “income approach” to value, value is determined by taking net income (generally excluding depreciation and any mortgage payments) and dividing by a capitalization rate, to reflect the risk an investor would take in purchasing the property.
Again, owners should use common business sense in considering whether to file an appeal. If commercial properties in your area are selling for $1 million and your assessment is $700,000, you should think hard before filing an assessment appeal. The people hearing your tax appeal at the Board of Property Assessment (the first stage of the process in Allegheny County) or at the Board of Viewers (the second stage) are very knowledgeable about local real estate and are not be swayed by emotion. But if sound reasons exist, tax appeal opportunities should be pursued, and retention of legal counsel knowledgeable about Allegheny County tax appeal law and practice should be considered if the matter is complex.
For further information, contact Tucker Arensberg attorneys John Vogel at (412) 594-5622 or Gavin Robb at (412) 594-5654.