Since the reassessment in 2012, school districts across Allegheny County have filed thousands of tax appeals in an effort to increase property taxes for new home buyers. We expect this trend to continue into 2019.
There is a serious legal question whether or not such appeals violate the uniformity clause of the second class County Code. We believe appealing the assessments of ONLY new home buyers should be considered spot-assessing in violation of the Pennsylvania constitution. This practice does not treat all property owners equally.
Property owners who have been appealed should aggressively defend school district appeals. For almost 20 years, our property assessment lawyers have helped thousands of residents in Allegheny County in assessment appeals, including,
There are 45 school districts in Allegheny County, Pennsylvania. Every year, any taxing entity (County, School, or Municipality) and all property owners have the right to file new Allegheny County property tax appeals. Based on the past few years, it is expected that thousands of appeals will be filed by the school districts within Allegheny County in the 2018 tax year.
If your property has been appealed, it is important to remember that Allegheny County is currently under a 2012 base year system. This means that all properties should be assessed on what their fair market value is as of January 1, 2012, and not simply the most recent purchase price.
Taxing entities (County, School and Local) have been filing tax appeals against property owners if they believe the new assessments are less than the current fair market values. Most of these appeals are fueled by recent purchase prices which are higher than the 2012 certified assessments.
It is important to understand that in these assessment appeals, there are 4 interested parties. They include:
Over 90% of the taxing entity appeals are filed by the school district only, and not all of the municipalities will be involved in the litigation. The school district files the most appeals because they typically have the highest millage rate and therefore the most financial incentive. The municipalities typically do not file appeals because they often have lower millage rates and “piggy back” off of the school districts. Most municipalities realize that they can receive additional taxes without paying any legal fees. (There are some municipalities that do aggressively get involved). Finally, the County’s position is supposed to support the 2012 ‘base year’ certified assessment of the property (which they paid millions of dollars to ‘certify’). Unfortunately, the County sometimes supports the school districts. Very rarely if ever, have we witnessed the County strongly oppose a school district appeal.
Since as far back as 2004, School Districts have been aggressively filing property appeals against property owners. These appeals typically target recent home buyers. Their rationale is that if you recently bought a house for $500,000.00, and you are only assessed at $300,000.00, then your property taxes should be raised to reflect your purchase price. On first glance, this seems rational. However, it is flawed for several reasons.
First, if two neighboring properties are identical, and the County certifies the value of both properties at $300,000.00, then both pay taxes on an assessed value of $300,000.00. However, let’s assume, one of the houses then sells for $500,000.00. The school district will file a property tax appeal against the one property only based upon the recent sale price. If successful, the school district will obtain additional revenue, but at the expense of one property owner now paying 40% more in property taxes than the identical property next door.
In essence, the school districts want to establish that two identical properties should be assessed differently because one of them sold. Over time, this creates significantly disparate tax burdens on similarly situated properties, and in our humble opinion, becomes not only grossly unfair, but indeed unconstitutional.
Second, a sale price is not always indicative of the true market value. Property owners often pay higher or lower than the true price of a property for many reasons. We have had clients move to Pittsburgh from New York, Virginia, and California, all areas where the real estate market is significantly higher. These owners typically substantially overpaid for properties based upon their prior locations and the real estate markets in those locations.
Additionally, other items may have been included in the purchase price which makes the listed purchase price more inflated than the true price that was paid for the house. In fact, some property owners unfortunately discover various problems within their properties following the time of purchase, which can often mean that the true fair market value of the property is lower than what was actually paid.
The bottom line is that there are numerous reasons why it is improper and unfair to simply rely on a recorded sales price to set the property assessment.
A: Absolutely, Yes.
Property owners can successfully defend school district appeals if they can prove that their recent sale was higher than the true real estate market value or can show that the school district has not met their burden of proof.
When schools file an appeal against a property owner, the school district has the burden of proof. Legally, to change an assessment, a valuation method must be used. There are 3 valuation methods: sales comparison, income and expense, and construction cost (typically only relevant for newer construction).
The school districts most often simply try to present the deed for the sale of the subject property as a basis to raise the property taxes. A sale of a subject can be persuasive, but is NOT controlling. A valuation method must be used, and if only a deed is presented, (without a valuation method), the taxing entity has not meant their burden of proof and the appeal should be denied.
The reality is that the school districts hope that the property owners do not appear at the hearing or in the alternative, appear by themselves without proper representation.
Property owners can represent themselves, but need to understand the risks of proceeding on their own.
First, property owners are at a disadvantage because they do not know the system, the rules of law, or the forum involved. The school district attorneys are instead familiar with the process and many of the other attorneys present at these hearings. The lawyers involved will typically know the hearing officers on a first name basis, and experience can make a significant difference in the final result of an assessment appeal hearing.
Second, property owners do not have the advantage of having negotiated and litigated many cases previously. We unfortunately know for a fact that not all of the school district attorneys and hearing officers treat all of the property owners the same.
The reality unfortunately exists that personality and relationships still factor into assessments. The assessment process is not blind, and in our humble opinion, can be very unfair for certain property owners. We have seen basically identical houses on a street be settled by school districts with large discrepancies between the settlements because of how the evidence was presented. Knowing the best and most efficient way to present evidence can make a significant difference.
Third and most importantly, the lawyer for the school district can cross-examine the property owner to actually make their case against the property owner. This might be the strongest argument not to represent yourself.
Often, at the hearing, the school district is only prepared with a copy of the Deed showing the new price. Some school districts are obviously more prepared than others and will bring comparable sales. But as stated, a copy of the Deed SHOULD NOT meet the school’s burden of proof alone. If the homeowner appears, the school district may then cross-examine the property owner under oath, and use their testimony as evidence to increase the owner’s assessment.
Be Careful About Attending the Hearing:
Depending on the property’s owners responses, the school can actually have a better case with the property owner present than if they would have simply stayed at home. We are NOT advising anyone to stay at home or miss their hearing. However, understanding ‘burden of proof’ and understanding what the best evidence to submit is, does make a difference. Very rarely will we ever advise a property owner to attend the hearing with us.
Each case is certainly unique. However, defending school district appeals is really about being more prepared than the taxing entity with solid evidence, legal arguments, and the ability to negotiate the best settlement.
The property tax appeal attorneys at Flaherty Fardo have a reputation of fairness and success in this business and have helped hundreds of property owners successfully defend school district appeals.
“I retained Flaherty Fardo, LLC to defend me against the city’s appeal of my property tax assessment. I received numerous solicitation letters from various law firms seeking to represent me. What made Flaherty Fardo stand out was the quality of the information available on their website, as well as the knowledge, experience and professionalism of its lawyers and staff – particularly Attorney Noah Fardo. Thanks to their skill and advocacy, the city lost its appeal and I will not face an unexpected and significant increase in my real estate taxes. I have recommended their services to friends confronting the same situation, and Flaherty Fardo achieved a favorable outcome for them as well. I was extremely satisfied with Flaherty Fardo’s representation, and while I hope that I will never need a lawyer, it is comforting to know that I can turn to them.” Heather S., Pittsburgh resident
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If you would like a free consultation concerning defending a school or local tax appeal, or any other real estate matter, please call attorneys Noah Paul Fardo or Nicole Hauptman Amick directly at 412.802.6666 or complete the form below.