PHILADELPHIA – The City’s Office of Property Assessment announced today that it has completed reassessments of all properties in Philadelphia, the first such reevaluation of market values since before the COVID-19 pandemic. At the same time, city officials unveiled plans to expand key relief programs to mitigate the impact of rising values on homeowners, and proposed reductions in wage taxes to speed the city’s economic recovery and ensure its future competitiveness.
The new values of more than 580,000 residential, commercial, industrial and institutional properties in the city are to take effect for Tax Year 2023, with property taxes due on March 31, 2023. However, the Tax Year 2023 property values are not yet available online. They are expected to be uploaded to the property search application by Monday, May 9, 2022. Written notices of the new values are scheduled to be mailed out by September 1, 2022 at the latest.
“The goal of this year’s reassessment is to ensure that assessed values more accurately reflect sales and market forces,” said James Aros, Jr. Chief Assessment Officer, Office of Property Assessment (OPA). “By doing so, we accomplish one of OPA’s core missions: to minimize the inequities among comparable properties by ensuring that similar properties have similar assessments.”
This new reassessment is the first to utilize OPA’s new Computer Assisted Mass Appraisal (CAMA) system. “CAMA and other process changes represent the next step in the continued improvement of the accuracy, equity and uniformity of the City’s assessments,” said Aros.
Citywide reassessments scheduled for Tax Years 2021 and 2022 were postponed due to the operational issues posed by the implementation of CAMA (TY21) and the COVID-19 pandemic (TY22).
Reflecting the strong real estate market in Philadelphia, the citywide reassessment found that the aggregate value of all properties in Philadelphia has risen by approximately 21 percent since Tax Year 2020. Factoring in projected appeal and collection losses, this will result in additional property tax revenues to the General Fund of $92 million in FY23 and $460 million for the City’s general fund over the course of the FY23-27 Five Year Plan. Information on appeal options can be found below.
Relief Programs & Wage Tax Reductions:
Concurrent with the release of the new property values, Mayor Jim Kenney today proposed a package of relief measures and reductions in the Wage Tax. Taken as a whole, these measures will ensure that the estimated $460 million increase in revenues resulting from new assessments are put directly back into the hands of taxpayers. Details on those proposals can be found below.
“Our Administration looks forward to working with our partners in City Council to do everything in our power to protect homeowners affected by this long-term boom in the real estate market,” said Mayor Jim Kenney. “As I noted in my budget address, growing property values reflect well on Philadelphia being a place of choice and represent an opportunity to build wealth for some. But homeowners deserve protections, which is why I am proposing $200 million in new homeowner and rent relief over five years.
“At the same time, the additional revenues resulting from these rising values present an opportunity to reduce the most onerous of the City’s taxes, the Wage Tax, by $260 million. This is particularly crucial now, as Philadelphia continues its post-pandemic economic recovery. Taken as a whole, these moves will protect our seniors and longtime homeowners while benefiting workers, employers, and the city as a whole for generations to come.”
The $200 million in homeowner and rent relief includes the following:
- Homestead Exemption: The Mayor proposes that the Homestead Exemption, which reduces the taxable portion of a primary residential property’s assessed value, be increased to $65,000 from the current $45,000. Homeowners currently in the homestead program will automatically see this change and do not need to re-apply. With this change, most homeowners will save more than $900 on their Real Estate Tax bill.
- Longtime Owner Occupants Program (LOOP): The Mayor also proposes a 20% increase to funds set aside for the LOOP program, the income-based program for homeowners who have lived in their home for ten years or more and experience a significant increase in their property assessment. Under the plan, the total amount of funds available for disbursement among qualified homeowners in a single fiscal year would increase to $30 million from the current $25 million.
- Additional Relief Efforts: The Mayor proposes allocating $40 million over five years to enhance implementation of all relief programs, increase outreach to homeowners about the programs, and to work with City Council on using a portion of those funds for improved rent relief and to improve participation in the Senior Citizen Tax Freeze program.
“Philadelphia has some of the most progressive Real Estate Tax assistance programs in the nation,” said Revenue Commissioner Frank Breslin. “Together with City Council, we have designed these programs to protect our city’s most vulnerable homeowners from enforcement action. Any homeowner who finds they cannot pay their taxes should contact the Department of Revenue or a Housing Counseling agency.”
Wage Tax Reductions: Of the $460 million in anticipated additional property tax revenues over five years, Mayor Kenney proposes that $260 million be used to offset substantial reductions in the Wage Tax. Under the plan, the residential rate would be reduced over the next two years to 3.7 percent (from the current 3.8398 percent), and the non-resident rate would be reduced to a flat 3.44 percent (from the current 3.4481 percent). These would be the lowest wage tax rates in Philadelphia since 1976.
“Thousands of Philadelphia business owners and workers struggled during the pandemic, and these reductions in the Wage Tax demonstrate that the Mayor is focused on creating an economic climate that boosts their recovery,” said Philadelphia Commerce Director Anne Nadol. “The reductions are acknowledgement of the sacrifices of business owners who remained committed to Philadelphia during the pandemic, and will help them better contend with staffing shortages and other challenges.”
As part of this business and worker relief, the Mayor announced that he will seek state authorization to adopt market-based sourcing for service businesses. Under this approach, all service businesses in Philadelphia will only be required to pay Business Income and Receipts Tax on sales delivered to customers located within the city limits. This change in policy is meant to promote fairness by leveling the playing field for Philadelphia-based service providers with companies based outside of Philadelphia. It also will make Philadelphia business taxes consistent with Pennsylvania corporate income tax rules.
Information on Property Assessment Appeals: Property owners who believe their valuation is incorrect can request a First Level Review (FLR) with the OPA. FLR forms will be included with the Notice of Valuation that is to be mailed to property owners later this year. Residents who are not satisfied with the outcome of the First Level Review, or decide to skip the FLR process altogether, may file a formal appeal with the Board of Revision of Taxes (BRT). Formal appeals are due to the BRT by the first Monday in October. Details on both appeals options can be found at phila.gov/opa.
Additional Relief Programs: In addition to the Homestead exemption and LOOP program discussed above, residential property owners are reminded of the wide array of other relief programs that are available. These include:
- Owner-occupied Real Estate Tax payment agreement (OOPA). Provides affordable and manageable monthly payments for homeowners who struggle to pay past-due Real Estate Tax. Some homeowners can qualify for a zero dollar a month payment agreement.
- Low-income Senior Citizen Real Estate Tax freeze. Income-based senior citizen program that “freezes” Real Estate Tax so that they don’t increase in the future, even if the rate or assessment increase.
- Real Estate Tax installment plan. Qualified homeowners may pay current year property taxes in up to twelve monthly installments through December 31.
- Real Estate Tax deferral program. Income-based program for homeowners with Real Estate Tax increases of 15% or higher.
- Tax credits to excuse Active Duty Reserve and National Guard Members from paying Real Estate Tax while they are called to active duty outside of Pennsylvania.