The Fix Is In On Under-Assessed Properties
Why Allegheny County Tax Assessment Left 7/10 Under Assessed
We believe 7 out of 10 residential properties in more affluent areas are still under-assessed in the Allegheny County tax assessments. We will further argue how this was intentional rather than accidental and is going to create some future problems for residents, depending upon where they live.
Poor homes were being penalized and the more affluent areas were paying less after the last Allegheny County tax assessment. The court ordered a reassessment. The goal of the reassessment was to make properties more accurately assessed closer to their true market value (i.e. recent sale price). This would help relieve the tax burden of lower income properties paying more than their fair share.
Now for a long time, we have believed that a sales price is NOT controlling of market value. The Pennsylvania Supreme Court agrees and has held that sale prices can be persuasive but are not the only factor in determining market value. People often pay more or less for homes for a variety of reasons.
A sale price cannot, however, be ignored. The sale price is still one of the best pieces of evidence to determine market value. The new 2013 Allegheny County tax assessments are consistently below the sale prices and lead us to believe that such an outcome was premeditated by the county.
While assessing most recent home-buyers at 80-95% of their purchase price is a great idea for limiting appeals, it defeats the entire purpose of why the Allegheny County tax assessment was ordered in the first place.
The Fix Is In
Over the last 3 months, we have spent considerable time analyzing and reviewing new assessments for property owners. Unlike the 2001 Allegheny County tax assessment -- when we believed 7/10 homeowners were over-assessed -- the converse is now true. The reason is politics. The “fix was in” – in order to limit appeals.
When examining areas like Upper St. Clair, Mt. Lebanon, Sewickley, Sewickley Heights, Collier Township, Fox Chapel, Ben Avon Heights, and Pine, there is one consistent fact: most recent home-buyers are assessed less than their purchase price. In some cases, it is outstanding.
In Sewickley, a property sold three times between 1998 and 2007. Each sale was above 1.6 Million, with sales of almost 2 Million in 2004, and in 2008. The new 2013 assessment is 1.3 Million.
In Sewickley Heights, a property recently sold for 1.85 Million. The new reassessment is 1.2 Million.
In Ben Avon Heights, a property sold for almost $600 K in 2006. The new assessment is $335K.
In Sewickley, a property sold for 2.4 Million in 2009. The new assessment is 1.3 Million.
In Fox Chapel, a property recently sold for $735K, the new assessment is $565K.
In Upper St. Clair, a property sold for $650K in 2010, the new assessment is $475K.
In Mt. Lebanon, a property sold for $750K in 2010, the new assessment is $600K.
We have seen hundreds of examples that indicate a deliberate attempt was instituted to keep assessments under the sale price. If you go to any municipality where home prices average above $200K, and enter a street name, you will see that most recent home-buyers are under-assessed and in some cases dramatically. (Here is the court ordered website: http://www2.alleghenycounty.us/reval/Search.aspx).
For years, we have thought that if someone wanted to fix the Allegheny County tax assessments, then they should simply assess everyone at 80-85% of their true market value. It would make it almost impossible for many people to appeal, and homeowners would feel as though they were being treated fairly.
Here is the problem. This reassessment was based upon 100% of fair market value as of 1/1/12. This means that properties should be assessed at 100% of market value, not 80-85% or less.
By assessing properties at less than fair market value, the county is deliberately discriminating against lower income neighborhoods and gives more affluent areas an additional tax break.
What may be even worse is that some school districts have indicated that they will now appeal any property which is $15,000 or more under the sale price but only -- and this is key -- in some school districts (e.g. if a property recently sold for $300K, and was assessed at $285K, some school districts appear to be filing new 2013 appeals).
So once again, we will have gross inconsistency across the board whereby property owners will be treated differently based upon the school district in which they live. Recent home buyers will also be penalized in some instances, as individuals who purchased their homes many years ago are not as likely to be appealed this year, simply because there is no recent purchase price on the property. In our opinion, this will violate the uniformity provisions of the Pennsylvania State Constitution.
We believe the county deliberately worked to limit appeals. There is no other rational explanation as to why so many properties would consistently be below their sales prices throughout Allegheny County.
While we like the idea of giving tax breaks, this is not what the court ordered. This is going to create real problems for some homeowners and further increases the lack of uniformity among taxpayers depending upon where they live.
If you have any questions about Allegheny County tax assessments or real estate in Pennsylvania, please feel free to contact us at Flaherty and Fardo for a free consultation.