Through March 31, 2023, property owners can take advantage of a special appeals window to appeal their 2022 property assessments which may result in significant tax savings for homeowners. Typically, property owners may only challenge their taxes for the current tax year between January 1 and March 31.
In Allegheny County, property assessments can be appealed annually between January 1st and March 31st by the property owner or any taxing body with a vested interest in the parcel. Most property assessment appeals, particularly when the owner is unwilling or unable to hire an expert, are based upon the purchase price of the property in either the calendar year of the appeal or the year prior to the appeal being taken if sold in an arms-length transaction. The County will also accept an appraisal if a purchase has not occurred so a tax reduction may also be possible for those owners who have refinanced their properties. As the appeal process can take several months, taxes still must paid pending the appeal, and if successful, a refund will be applied.
Pennsylvania law requires application of the common level ratio (“CLR”) to the current market value of a property. The ratio is officially determined by the State Tax Equalization Board (“STEB”) for each of Pennsylvania’s 67 counties for the prior calendar year, which are to be issued by the July 1 effective date, but this is based on information that each county submits. STEB uses the median value of the ratio between the assessed value and fair market value of real estate in a county by comparing the recent actual selling prices of real property in the county with the assessments of each sold property. The ratio adjusts the valuation of a property so it is comparable to properties in which the value hasn’t been re-assessed since the last countywide valuation in 2012, the “base-year valuation.” In many cases, if the property is sold at a price well above the base-year value, a taxing authority, school districts in particular desiring to increase tax revenue, appeal the assessment as being too low. In such cases, assessors are supposed to value properties and then modify that figure with the reciprocal of the actual CLR, which is the CLR factor.
A new CLR is determined each year based on the sales in the preceding year and are used on sales from July 1 to June 30. As a result, sometimes the CLR could be outdated or inappropriate to use as a basis of fair market value. Although the CLR can be used to remove severe inequities, it is not an ideal solution to achieving uniformity in taxation as required by the Pennsylvania Constitution. The Covid-19 Pandemic impacts on the housing market, as a result of low interest rates and housing inventory, revealed that the CLR being used in Allegheny County did not accurately reflect the price appreciation in market values since the 2012 base year. A group of taxpayers brought a lawsuit alleging that they have been treated unfairly when local governments, typically school districts, appealed the property values of their recently purchased homes in what has been deemed a “newcomer tax.” This results in the County, the School District, and Municipal governments receiving increased revenues from the assessments of the appealed properties, without increasing millage, and without affecting neighboring properties of similar size and value that have not recently sold and that have not been appealed in what has been deemed “sales chasing.” Property owners are typically not sophisticated as to how the system works, which means the homeowners in these situations often overpay their fair share of taxes.
In the lawsuit, docketed at Allegheny County case number GD 21-7154, the Plaintiffs allege that the County incorrectly codes real estate sales for submission to STEB in a way that artificially overstates, or inflates, the CLR to be calculated by STEB. The lawsuit focuses on 2020 sales data, in which the County reported a total of 34,563 sales to STEB, but the County coded only 5,355 sales, or 15.49%, as “00” “valid sales” for the purpose of STEB calculating a CLR. The lawsuit alleges that the County miscoded family transfers, foreclosure sales, government agency transfers, estate sales, multiple parcel sales, and special warranty or quit claim deeds as less than market value sales or non-arm’s length transactions. This is likely due to the fact that the County fails to employ a competent and qualified professional “Chief Assessment Officer,” as required by County Administrative Code, Chapter 5, Article 209, §5-209.05, to oversee the resubmission of the data to STEB. The County’s Office of Property Assessment Manager testified that a computer program automatically invalidates transfers without any review by a human. The last time the County employed a Chief Assessment Officer was in January 2013, the year following the last county-wide reassessment. Although housing prices have increased on a yearly basis, the County CLR has remained nearly stagnant as a result of the manipulation in data from improper coding practices.
On September 1, 2022, Allegheny County Common Pleas Judge Alan Hertzberg ruled that the county “failed to administer the property tax assessment appeal system in a just and impartial manner” and issued a preliminary injunction setting the CLR for 2020 sales at 63.53%. Judge Hertzberg ruled that although the County had been using a ratio of 81.1%, evidence showed that the Office of Property Assessment had been “cooking the books” and manipulated sales data in a fashion that resulted in artificially high property values. Judge Hertzberg further ordered that the County resubmit 2020 sales data to STEB for recalculation of the CLR after the County reexamined sales data to determine the CLR was not accurate. An appeal of Judge Hertzberg’s decision remains pending at the Commonwealth Court of Pennsylvania.
In a separate lawsuit, docketed at GD-22-12556, Plaintiffs Madelyn G. Gioffre, CAA Investments, Inc., and Mark and Annie Landman sought a Temporary Restraining Order and for Preliminary Injunction against the Allegheny County Board of Property, Assessment, Appeals and Review (“BPAAR”), so that BPAAR use the CLR published by STEB for 2021 sales, 63.6%, to apply to 2022 appeals based on current market value. In the related Commonwealth Court proceeding at No. 1100 C.D. 2021, the Attorney General has stated that STEB will not calculate the correct CLR until the appeal to Commonwealth Court of case number GD 21-7254 is decided by Commonwealth Court. This case remains pending.
From July 1, 2022 to June 30, 2023, the CLR in Allegheny is set at 63.53%, at a CLR factor of 1.57, meaning the market value should equal 1.57 times the assessment, or in the reverse, assessments should equal about 63.53% of market value. The county will not reassess your property’s value for you and you will continue to overpay taxes unless you appeal. Appeal outcomes for tax year 2022 will be carried over in 2023 if there is a change in value, but appeal filings for 2023 are not retroactive to 2022. If you are successful on the 2022 special appeal, you may get a refund for both the 2022 and 2023 tax year.
You can view your current property assessment by visiting the Allegheny County Tax Assessment Portal here and entering your house number and street name. You will find your property’s assessed value as indicated under the “total value” for “2023 Full Base Year Market Value.” If you multiply that number by the CLR, you will be able to calculate the current market value of the property according to the county assessment office. It is suggested that property owners who have a property assessment that is at least 50% of their fair market value should seek an appeal. If you think your property is being over-assessed and you are overpaying your fair share of real estate taxes, please contact us.
The Law Firm of Sebring & Associates has significant experience in representing property owners of residential and commercial properties with property tax assessment appeals in Allegheny County. Not every property owner will be affected by this change but we will be happy to review to see if you would qualify. The deadline is quickly approaching – don’t miss your chance to save thousands of dollars on property taxes!
Call us at 412.856.3500 or fill out this form to contact us about your situation.