It is easy to understand why commercial property tax appeals in Allegheny County are expected to skyrocket in 2021. The pandemic has caused an unprecedented number of closures of retail businesses and restaurants. Even once steady commercial properties are experiencing increasing vacancies and declining revenue. To make matters worse, the demand for commercial space is declining as a significant portion of the workforce is now working from home and many larger businesses are downsizing the amount of space that their businesses actually need. Lower demand will lower the market rent for many commercial spaces. The expectation is that 2021 will have an influx of new commerical property owner tax appeals in Allegheny County, and rightly so.
Many assessments for commercial properties are based on an income approach to value, whereby the assessment value is determined by the net revenue as applied to an appropriate capitalization or CAP rate. As vacancies increase, and/or Landlords reduce rent in an effort to keep tenants, commercial property owners will experience decreasing revenue which should support lower property assessments, and in many cases those reductions may be substantial. It is right that a commerical property owner should be allowed to appeal when revenue decreases. It is not that different than the taxing bodies increasing assessments on improvements to a property. It should work both ways, and commercial property owners should take advantage of the opportunity to lower their commerical property taxes in 2021. Most assessment experts are expecting the highest number of commercial tax appeals in Allegheny County since the 2012 reassessment.
If you own commercial property in Allegheny County, Pennsylvania and have experienced a decrease in revenue or have had occupancy issues, you should consider filing a 2021 property tax appeal with the Allegheny County Office of Property Assessments. The deadline to appeal is March 31, 2021. There is no cost to appeal. We offer free case reviews for all commercial and residential tax appeals at email@example.com.
2020 has been especially harsh for recent property owners in Allegheny County who have bought a new home and were appealed by their local School District. School Districts have often filed tax appeals against recent home buyers whose property assessments were less than the purchase price in what has commonly been referred to as the "Welcome Stranger Tax." 2020 is different for a couple of reasons. First, with some School Districts struggling with revenue, many lower value properties, including some assessed below $40K are now being appealed. The problem is that the lower valued areas typically have the highest millage rates and the owners cannot afford the increases. In recent years, some schools would not appeal any property under $500K. Not anymore. Lower income properties are no longer safe from tax appeals filed by the school districts.
The second major difference in 2020 is that the School Districts are winning (at least at the first level) over 90% of their cases, which is unusally high, and worse, almost every single school district appeal is being raised to the exact same ratio of the sale price. This may sound fair, but essentially ignores all evidence at the first level hearing, and basically assures that over 90% of the first level tax appeals will now have to be appealed again to the second level Board of Viewers. There are important considerations that are apparently not being adjusted after the first level hearings, including, "seller assist," "inventory included in the sale," "motivated sale factors," or even a complete lack of uniformity in assessments.
There is a two tiered system for property tax appeals in Allegheny County. The first level is the BPAAR (Board of Property Assessment and Review). The second system is a de-novo appeal system (new or fresh appeal) to the BOV (Board of Viewers). If the school district or other taxing entity has appealed your property assessment and you lose at the first level, you should not be discouraged and should strongly consider appealing the case to the Board of Viewers (BOV) since that is what is apparently necessary in 2020. All BOV appeals are retroactive to the original filing year. You should be aware that an appeal to the Board of Viewers can only be withdrawn with consent of all parties. For more information about defending school district appeals, please feel free to visit How to Defend School Appeals.
The logic is not hard. If you only appeal recent home-buyers over an extended number of years there will be discrepancies in the ratios of assessments to sales price. Inevitably, neighboring properties will have drastically different and unfair property assessment values. Some neighbors will be taxed at half or twice as much as their identical neighbor simply because the school district only appealed the property that recently sold. The law in Pennsylvania on property taxes is clear that "any system which results in intentional or systemic undervaluation of like or similar properties is impermissible" (Fosko v. Luzerne County (166PaCmlth393) . Everyone needs to be taxed fairly. But by waiting so long between reassessments, Allegheny County is creating an extraordinarily unfair taxation system. The system is undoubtedly broken, not only because of gross discrepancies in the assessments of neighbors, but also because of the increasing millage rates, where homes in school districts like Penn Hills, now pay over 40 mills ($4k in total taxes for every $100K assessed). A County wide reassessment not only helps correct the discrepancies of ratios to sales prices, but it also reduces millage rates. North Allegheny and the City of Pittsburgh both had millages rates above 30 mills prior to the 2012 reassessment, and now are both at about 23 mills (i.e. paying $2300 for every $100K assessed instead of $3K for every $100K assessed). Reassessments do decrease millage rates and help keep the system fair for everyone.
In 1999, we started reducing property taxes for select residential properties in Allegheny County, PA. In the last 20 years, we have helped over 5,000 + property tax appeal clients save tens of millions of dollars in actual property taxes. This is not a guarantee of an outcome, but does demonstrate that our Pittsburgh law firm is one of the most experienced property tax appeal firms in Allegheny County. If you would like a free consultation on a commercial or residential property tax appeal in Allegheny County, PA, please feel free to email us at firstname.lastname@example.org.