How the tax-abatement program works

Philadelphia's 10-year tax-abatement program has been a remarkable deal, for a relative few.

By and large, developers and new-home buyers are the ones who have benefitted. But average homeowners can get in on the savings, too.

Abatements allow property owners to increase the value of their real estate - by, say, adding a bedroom suite, or building a new house on an empty lot - while paying the same tax as they did before the changes were made. The discounts apply only to the improvements and are good for 10 years.

"The key is, the improvement has to add value to the property to get an abatement. Basic maintenance doesn't add value," said Barry Mescolotto, acting director of assessments for the Board of Revision of Taxes (BRT). The seven-member panel, appointed by Common Pleas Court judges, assesses city real estate for tax purposes and issues the abatements.

A new roof probably would not qualify for a tax subsidy. Nor would new siding or a new sewer line. Since the program started in 1997, the BRT has rejected at least 1,300 abatement applicants.

The discount is available to anyone whose project qualifies, and who is willing to jump through a few bureaucratic hoops.

As in all city construction jobs, the first step is to get the necessary building permits from the Department of Licenses and Inspections. Next, a simple two-page abatement application must be filed with the BRT.

Homeowners rehabbing existing houses must apply by the end of the calendar year in which the work begins. Developers of commercial or new residential buildings get only a 60-day window to file.

The BRT vets the applications for tax deadbeats, who are ineligible for abatements. It then determines how big a discount, if any, the applicant will get.

The agency does that by examining building permits - which show the estimated cost of the construction - and by visiting properties to assess the value of the improvements, according to Mescolotto.

Property owners can appeal the BRT's abatement decisions through the same mechanism used to challenge property assessments. Challenges are first made to the BRT hearing board, Mescolotto said. If the appeal is denied, property owners can appeal again in Common Pleas Court. While Mescolotto said no one has yet appealed an abatement decision by the BRT, the amount of an abatement can be a factor when property owners appeal their tax assessments, which is routine.

Upon moving in, buyers of new homes must file a certificate of owner occupancy with the BRT. Residents renovating their homes must send the agency a notification letter when the work is done.

The abatement is then affixed to the property for 10 years. A homeowner who moves cannot take the abatement along. Instead, what is left of the tax break is transferred to the new owner.