Many Philadelphia property owners will see higher real estate tax bills next year despite the new city budget containing no tax rate increases.
That’s because the city is resuming property reassessments, which were paused in the final year of Mayor Jim Kenney’s administration. The new valuations will capture two years of growth and are likely to increase steeply in neighborhoods with strong real estate markets.
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The Office of Property Assessment was supposed to have published the new assessments by the time first-year Mayor Cherelle L. Parker and City Council reached a budget deal early Thursday morning. Instead, lawmakers gave preliminary approval to the budget based on estimates for the real estate tax, which is levied at 1.3998% of a property’s assessed value.
The new valuations will be available by the end of the month, Finance Director Rob Dubow said Thursday. Those values will be used to calculate property tax bills due by March 31.
Parker’s administration in March estimated that revenue from residential properties will increase 8% while staying flat for commercial properties, due in part to uncertain valuations for office buildings amid the work-from-home era. That would produce $877 million in revenue during the budget year that begins July 1.
It’s possible valuations will come in even higher, as the city bases assessments on the amount for which a home could sell. To help offset tax increases for homeowners, Parker and Council agreed this week to approve two new property tax relief measures for homeowners.
Here’s what to know about the options that will be newly available to homeowners:
The homestead exemption is expanding
What it is: The homestead exemption allows for Philadelphians who own their homes to reduce the value of their assessments when calculating tax bills. The exemption is increasing from $80,000 to $100,000. That means that if your home is assessed at $200,000 this year, you will only be taxed based on a value of $100,000 if you apply for and are granted the homestead exemption.
Homeowners whose houses are worth less than $100,000 will owe no taxes, and those whose properties are valued above $100,000 will save an additional $280 on their property tax bills. That’s on top of the about $1,000 homeowners already save with the existing $80,000 exemption.
Who qualifies: Anyone who owns the home they live in. There are no income requirements, and people who owe back taxes or mortgage payments can still apply.
How to get it: Homeowners can apply online, through the mail, or by phone at (215) 686-9200. You can find detailed instructions on how to apply here. The deadline is Dec. 1 each year.
If you already have the homestead exemption, you don’t need to reapply to take advantage of its increase.
The impact to the city budget: The expansion of the exemption will cost the city about $21 million this year, according to Dubow.
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Low-income homeowners will be able to freeze their bill
What it is: Philadelphia already allows low-income seniors to freeze their tax bills as a result of hikes in their assessments or a tax rate increase. Now, under legislation approved Thursday by Council and supported by the mayor, that opportunity will be available to about 60,000 more low-income Philadelphians.
The legislation, authored by Councilmember Jamie Gauthier, was made possible because the Pennsylvania General Assembly this year passed legislation by State Rep. Jared Solomon (D., Philadelphia) allowing municipalities to enact property tax freezes for low-income homeowners.
Who qualifies: Individuals who make less than $33,500 per year and married couples who combined make less than $41,500.
Those cutoffs are based on state law, which defines “low income” as the current maximum allowable income for the state PACENET pharmaceutical assistance program. The state can adjust the range based on economic factors, meaning eligibility for the tax freeze could change over time.
How to get it: Residents aren’t yet able to sign up for the relief, but they will likely be able to do so by applying with the city. Seniors can currently apply for the tax freeze by filling out a form online or mailing one in.
The impact to the city budget: The tax freeze program is projected to cost the city about $2 million this year, a number that is expected to rise annually as more people sign up, Dubow said. Estimates suggest the program would result in at least $39 million in lost revenue over five years, about half of which would have gone to the School District of Philadelphia.
Parker said Thursday her administration advocated for setting aside $1 million to fund a public service announcement program that ensures people know about the tax relief options available to them.
