Thousands of homeowners in Philadelphia have received notice of their new property assessments in the mail in recent weeks — and the sticker shock is just setting in.
The city first announced its new property assessments — that will be hiking tax bills for many property owners next year — four months ago, but the mailed notices were delayed. If you’re just now learning about your new assessment, rest assured: You’re not alone.
Here’s what to know about the new assessments — and your options for fighting back against unfair increases and lowering your tax bills.
Explain it to me like I’m 5. What’s a property assessment?
The city evaluates the market value of every property in the city, based on what officials think the land and building would sell for in a free market.
This forms the basis for property tax bills. Under the state constitution, all properties are taxed at the same rate — which in Philadelphia is 1.3998% of the assessed value. So if the city thinks your property is worth more than the last time they assessed it, your tax bill typically also goes up.
Why did I get this assessment notice in the mail?
The new assessments were posted online in May, but homeowners have only just been receiving mailed notices. The city blamed the delay on an envelope shortage.
The city by law has to mail notices to every property owner. The official assessment notice allows residents to begin filing appeals with the Office of Property Assessment if they think that their properties were incorrectly assessed.
But be warned: If you want to challenge your assessment, the deadline is fast approaching. We’ll explain more below.
Why did my property assessment go up so much?
These 2023 valuations are the first citywide reassessment in three years, and residential properties are increasing 31% on average citywide.
The city has never conducted regular assessments, let alone annual ones. So instead of seeing constant small increases, many homeowners experience sharp property value increases.
The lack of regular assessments has also exacerbated systematic inaccuracies.
How accurate are the assessments? They’re worse in Black and low-income neighborhoods.
The goal of an assessment is to minimize error. When errors do occur in accuracy, they should be distributed equally so no one group of people is unfairly bearing a larger share of the tax burden.
But an Inquirer analysis found that the new assessments were systematically more inaccurate in Black and low-income neighborhoods. Why? In short, bad data, and restrictions that officials say bar them from considering demographics to ensure equity across racial and economic lines.
OPA said it has committed to conducting more regular assessments to help close these gaps.
How can I lower my tax bill? Start by looking at the homestead exemption.
The city operates a number of tax relief programs designed to lower the tax burden for some homeowners and developers.
The most popular residential tax relief program — called the homestead exemption — is available for all owner-occupied homes and lowers the amount of your taxable value. Next year, that reduction will be $80,000, saving a homeowner about $1,119 on tax bills.
There are other relief programs you might qualify for, such as programs targeted at longtime homeowners or seniors.
Even with expanded tax relief, your bill will likely go up.
The homestead exemption was significantly expanded by City Council and Mayor Jim Kenney’s administration this past summer to shield homeowners from forthcoming property tax increases.
But most enrolled homeowners will still see an increase in the tax bills, because the increase to the homestead exemption doesn’t fully offset the overall jump in assessments.
The majority of Philadelphia homeowners participate in the homestead exemption, and its value has been steadily increasing, from $30,000 in 2014 to $80,000 for tax year 2023.
That’s a significant jump; a Pew report analyzing property tax in major U.S. cities concluded that the city’s earlier $45,000 homestead was already “comparatively generous.” By law, the homestead exemption is capped at $90,000.
About 60% of Philadelphia property owners enrolled in the homestead exemption will see increased property tax bills next year under the new $80,000 value, an Inquirer analysis found.
Check whether you’re enrolled in the best tax relief program for you, because the city won’t tell you.
Changes to tax relief programs have made them more complicated — and homeowners need to weigh their options carefully to see what’s best.
An Inquirer analysis found that a few thousand working-class homeowners stand to lose money in tax relief by staying enrolled in the longtime owner occupants program, or LOOP.
Homeowners can’t enroll in LOOP and the homestead exemption simultaneously. When city officials expanded the homestead exemption, they also changed the cost-benefit calculus for the many homeowners enrolled in LOOP. And the city will no longer compare LOOP benefits to the homestead exemption to ensure residents are enrolling in the program that maximizes their savings.
The city says it’s offering residents more choices, and that it will communicate those choices clearly to Philadelphians in the months ahead. But property owners have criticized the system for being too complex.
Time is also running out fast for people who want to switch to the homestead exemption. The deadline is Dec. 1.
The deadline to appeal your assessment is coming fast.
There are two avenues to contest your assessment: filing what’s known as a first-level review with the Office of Property Assessments, which conducted the assessment, or appealing to the Board of Revision of Taxes, an independent oversight body. You can do both at the same time.
Property owners can submit BRT appeals even without their assessment notices. You need your notice to file a first-level review with OPA.
The deadline to file an appeal with OPA is Sept. 30, the city said last month. The deadline to file a BRT appeal is Oct. 3.