The City of Philadelphia's Actual Value Initiative (AVI)
might be on hold until next fiscal year, but it is still banking on real estate tax relief in the form of proposed
Homestead Exemption legislation. Homeowners must
apply by July 31, 2012, and the only requirement for acceptance into the program is that the you must own your home and live in it. It's actually a very simple process. On July 1, says Marisa Waxman, Office of Property Assessment, Philadelphia homeowners will receive a pre-printed application, so there's no need to take action until then.
"It's a tax relief program that already exists in every other county in the Commonwealth," says Waxman, who points out that other efforts both statewide and nationwide are often far more complicated.
Age, income and length of homeownership do not figure into eligibility. Here's how it works: you will pay taxes on the value of your home minus $30,000. For example, if a home is assessed at a value of $100,000 and there is a $30,000 Homestead Exemption, a homeowner would only pay taxes based on $70,000 compared with the actual value of $100,000.
"The City is currently undertaking a reassessment which will value properties at their market value. For residential properties, the comparable sales method is utilized in most cases. For commercial properties, the income/expense method is utilized in most," explains Waxman.
It does not matter if your home is worth $1 million or $80,000. You still get that flat $30,000 discount. Waxman says the greatest benefit will be for those with lower value homes. "It's the simplest program on the planet once we get it up and running."
The homestead real estate tax exclusion will be available for properties located within the City of Philadelphia when legislation is passed by the Commonwealth of Pennsylvania, and a City of Philadelphia ordinance also has to go into effect. But city officials are encouraging residents to apply now, as it can help reduce the taxable assessed value used for calculation of a tax bill by a proposed $30,000.
Even if part of a primary residence is used as a home office or a rental property, a property owner may still be eligible to benefit from the Homestead Exemption for the percentage of the property that functions as the primary residence.
Following approval, there's no need to reapply unless the deed to the home changes.
Applications received after the deadline for this year will be considered for tax year 2014. Those who are approved in this initial round will be notified in the fall of 2012, pending passage of AVI.
Source: Marisa Waxman, Office of Property Assessment, City of Philadelphia
Writer: Sue Spolan