Thousands of Philly homeowners lose millions in tax relief each year. Are you one of them?

One in five homeowners isn’t enrolled in the city’s most popular tax program. The deadline is Dec. 1.

• By Kasturi Pananjady, Max Marin, and Jasen Lo. Illustrations by Thomas Pullin.
• Published Nov 29, 2022

Philadelphia's latest citywide tax assessment raised residential property values by an average of 31%, which means taxes are soaring, too. But it's not too late to do something about it — and we can help.

One in five of the city's 324,000 owner-occupied homes isn’t enrolled in any of its tax relief programs, meaning those homeowners collectively pay $73 million more in taxes than they should. Each of those 65,000 homes is eligible for a homestead exemption, the city’s most popular tax relief program for primary residences, which reduces annual tax bills by up to $1,120. But homeowners must apply by Thursday to have the benefit for tax year 2023. We’ll tell you if you’re enrolled already.

The cost of missing out on the homestead exemption is greater than ever because the tax break is more generous than ever. The 2023 revaluation doubled property values in some rapidly gentrifying neighborhoods, raising concerns about equitable tax burdens and the potential displacement of Black and brown residents. Lawmakers, meanwhile, tried to protect homeowners from tax increases by expanding relief programs, which took center stage in budget negotiations between City Council and Mayor Jim Kenney's administration. And with the homestead exemption nearly doubling, enrollment has already surpassed the city’s expectations.

Because the city made some tax relief programs more generous, some homeowners already enrolled in one program would now be better off in another. About 20,000 homeowners with tax exemptions could be saving $14 million more than they currently are by enrolling in the homestead exemption or a program for long-time homeowners with skyrocketing property values, nicknamed LOOP, which was also expanded this year. We can help you figure out if your assessment increase makes you LOOP-eligible, too, and how much you’d save.

Keep in mind: The tool uses the city’s latest data on homestead exemptions, which is still being updated to include recent applications and approvals.

What’s the homestead exemption?

About 80% of Philadelphia homes that are primary residences are enrolled in at least one relief program. And about 70% of eligible homes are enrolled in the homestead exemption, which knocks a fixed amount of the taxable value off the assessment of a homeowner’s primary residence. It’s available to all homeowners, regardless of income or home value.

Philadelphia has one of the most generous homestead exemptions in the country, a Pew analysis found. Increasing the value of the exemption from $45,000 to $80,000 was a sticking point in this year’s budget negotiations, and officials touted the outcome as tax relief for residents – but the reforms only help those who enroll.

When budgets are drawn up, city officials assume that not everyone eligible for a property exemption will apply for one. But this year, about 3,000 more residents have already claimed the homestead exemption than anticipated, resulting in a budget imbalance of $3.1 million – $1.7 million less in tax revenue for the school district than forecast and $1.4 million less for the city.

Put another way: That’s at least $3.1 million saved by homeowners who the city thought wouldn’t enroll in the program.

“We’d be delighted if every eligible household enrolled and thus reduced our collections,” a spokesperson for the Kenney administration said in a statement. “The City is able to navigate small to moderate variances between initial projections and actuals.”

Which tax relief program is right for you?

An Inquirer analysis found that thousands of homes – as long as they serve as the owners’ primary residence – could have no tax bill for 2023 if taxpayers apply for the homestead exemption before Thursday.

That’s because those homes have a property assessment of less than or equal to $80,000, the value of the exemption. For other homes, the homestead reduces taxable value by $80,000 and the remaining amount is used to calculate the tax bill.

A word of caution: Some people choose programs that save them the most money in the long-term, even if that means paying more now. If homeowners anticipate big increases in their assessments in the future — if they live in rapidly developing neighborhoods or foresee owning for decades, for example — they may opt for LOOP instead of the homestead exemption.

What's best for someone depends on their personal circumstances and finances, said Rebecca Lopez-Kriss, deputy commissioner of the city's revenue department. “We can't make the choice for you,” she said, but the department explains the choices in promotional material. “We amended the application for people to do the math to figure out what's going to work,” she added.

The city also offers three more targeted tax relief programs: one for military personnel on active duty outside Pennsylvania; another for owners of new or renovated properties who qualify for a tax abatement; and a third for low-income seniors. What’s known as the senior tax freeze is unusual in allowing participants to double-dip and use the homestead, LOOP, or the abatement as well; typically homeowners can only enroll in one relief program at a time. These programs come with different application windows, depending on when you become eligible.

‘Equity issue’

The homestead exemption was created in 2013, and by state law, homeowners have to opt-in to the program. But uptake is uneven, determined by ease of access to information and experience navigating government bureaucracy. And when people miss out on exemptions, they shoulder more than their fair share of the city’s tax burden.

City officials acknowledge that the current system leaves people behind. "The city believes this is an equity issue," Lopez-Kriss said.

The 20% of homeowners who remain unenrolled live in neighborhoods across the city, with some concentrations, such as in Kensington and South Philadelphia, according to an analysis of Census data.

Housing advocates with neighborhood civic groups said enrollment is a constant challenge, particularly with seniors who may not be aware of existing relief options.

“It is [imperative] that the city promotes housing counseling agencies who can assist the homeowners in completing their application correctly,” said Mary Campbell, director of housing services with the New Kensington Community Development Corporation. “Most elderly people do not know the process of applying.”

Longtime homeowners who recently enrolled in homestead were stunned to learn that they had been paying more taxes than necessary.

Anthonet White, 56, bought her house in the East Mount Airy section six years ago after property tax increases at her first home in Northeast Philadelphia became untenable.

White, who works as a manager at a flooring company, said she might not have moved if she had known about the homestead exemption.

“[The city] needs to make sure people understand this program and help people in the process of homeownership,” White said. “It’s irresponsible … It really keeps us in the dark.”

White’s new home is facing a 49% increase in value under the city’s latest assessment. The homestead exemption, which she learned about and applied for this year after receiving a postcard from the city, will blunt most of that spike.

Some homeowners may have been enrolled in tax relief at one time, but become unenrolled in recent years. In some cases, tax abatements expire. In Faye Tinnin’s case, she unwittingly lost the homestead exemption two years ago when she changed the family names on the deed to her longtime home in North Philadelphia.

“I overpaid them for my taxes,” said Tinnin, 78, whose tax bill would have been reduced to nothing with a homestead exemption because her home was assessed at under $45,000.

What else could the city do?

Housing advocates said homestead participation would be much higher if the city assisted homeowners in enrolling.

There’s no requirement that homeowners be informed of exemptions when a deed changes – which clears previous tax exemptions. Lopez-Kriss said that was a good idea that the city could explore.

Wydia Copes, a housing counselor at Southwest Community Development Corporation, which serves predominantly Black and immigrant populations in Southwest Philadelphia, said enrollment is even more critical now that taxes are rising for thousands of homeowners.

“If their house is valued under $80,000, then they wouldn’t pay taxes at all,” Copes said of the increased homestead exemption’s impact on 2023 tax bills. “That means, if they were behind in their taxes, they have time to catch up on delinquent taxes, or put it to mortgage payments.”

“If their house is valued under $80,000, then they wouldn’t pay taxes at all,” Copes said of the increased homestead exemption’s impact on 2023 tax bills. “That means, if they were behind in their taxes, they have time to catch up on delinquent taxes, or put it to mortgage payments.”