Alert: 2012 Tax Assessment Appeal Update - State Rules on Revised Common Level Ratio for Philadelphia

Property owners challenging their 2012 Philadelphia Real Estate Tax Assessments received good news last Friday. The ongoing dispute between the City of Philadelphia and the State Tax Equalization Board (“STEB”) resulted in a decision by STEB that found that Philadelphia’s attempt to maintain its pre-determined ratio of 32% of fair market value was not supported by the actual data on record and that the common level ratio (“CLR”) to be applied in pending Tax Assessment Appeals for 2012 would be 25.2%.

Although this was higher than the CLR originally issued by STEB last July (18.1%), the new figure still significantly lowers the assessed values of properties on appeal and, therefore, the real estate tax payable to the City. In addition, property owners who paid transfer tax on the basis of the 18.1% CLR in non-arms length transactions in 2012 will now be able to seek a refund of the excess payment.

There may be subsequent appeals from this STEB decision and we are certain that the School District will seek to recapture some of the lost revenue by appealing decisions of the Board of Revision of Taxes (“BRT”) and seeking an increase in the fair market value of certain properties.            

All of this serves as a preview of the coming uncertainty over 2013 property assessments, including the likely implementation of the citywide Actual Value Initiative. Appeals in Philadelphia County for the 2013 tax year must be filed by Monday, October 1, 2012.      
 

For more information regarding property tax assessment, appeal, abatement and non-profit exemption matters, please contact Carl S. Primavera 215.569.1663 cprimavera@klehr.com.  He has been actively involved in appeals to the BRT and the recent hearing before STEB that resulted in this victory for property owners.