How is tax assessed in Philadelphia PA

Question

Bought a multi-unit rental on 2022, The Philadelphia school board now wants the property taxes to be revised. They want to assess the property taxes at the sale price, This will increase my taxed by 60%, has anyone faced this problem and how did you handle it. I never received any official letter from the tax office or the school board yet, Got to know about this when a tax attorney called and offered his service to fight. As per him, he is suggesting that he can bring down the tax to 85% of the sale price. That would still significantly increase the taxes, I own other multi unit properties in NJ, but never have faced a similar issue. Should i accept the 85% cost basis or should i fight for it to get it re assessed. I bought for 5 cap rate, now the ongoing cap rate is around 6.5 so there is already a 20 to 25% loss, not sure how to handle this. any advice will be appreciated. Thanks

Eric Greenberg · Answer

Something seems off. I honestly wouldnt worry about it until I received something directly from the city. Maybe give them a call (I know it can be rough to call them but may help clarify).

Also at this point I dont see why a lawyer would be needed. You have an appraisal from when you bought it and you wont be able to appeal for next year until later this year. They are so backed up with 2023 taxes appeals I can’t imagine theyll have time to discuss much for 2024 RE taxes until a later date.

Caroline Gerardo · Answer

Tax people DO NOT care about cap rates or listings from 11 months ago that did not close. Without a sale in past three months that are lower than what you paid you need to wait until you have the evidence.

Philadelphia market has declined about two percent in past sixty days. I don't know what location your property is or if that decline applies but get your commercial agent who sold you this to search for comps, or spend some time on Loopnet looking for closed deals that are like kind.

Think of it this way if you paid $X million then you got an appraisal to match and you were the market valuation at that moment, so why would the assessor believe that you overpaid for an investment, this is the Great Wall you need to overcome. Comparable sales and rent surveys are the evidence you need.

Caroline Gerardo · Answer

In most states, including PA, tax assessor can increase property taxes when a transfer deed is recorded. (Even when people change from Single Man to a LLC). Property taxes can also include special assessments, school, municipal costs, city ........ The highest number is used - sale price or what the city of Philadelphia guy at the desk determines the value is. You need evidence to show that the sales price which was the property listed in MLs and with competing bidders is not the real value or that the market crashed on your block since you overpaid. The desk has all the records- how it was advertised, square footage, condition, comparables, the MLS listing images so it is an uphill battle now to show you "overpaid."

Do not trust a "attorney who promises a huge discount" no one can promise the Department is going to take less.

What comparable sales do you have that are same square footage, in adjacent blocks, closed with a sale in the past three months. You need three at a minimum. If they are much lower you have a decent chance, if higher don't rock the boat. If you have some clear cases- fill out the forms carefulling answering every box and turn it in.

School board would not send you a letter or call you directly.

Alan Asriants · Answer

Seems fishy, if property.phila and atlas are showing a different assessed value than what this "letter" is saying I would see this as a red flag.

Sateesh B. · Answer

Atlas and the Phila.gov shows the taxes that we are currently paying. Dosent show any increase, Not sure why the school board attorney is filling a suit to reassess the property taxes.

Alan Asriants · Answer

Hey Santeesh, Eric is right, I would double check atlas and property.phila.gov to see what the actual tax increase is. I'm not really sure why the school board would be reaching out, and everyone should have gotten this news last year at the same time. Be careful who this "lawyer" is, he might be looking to get some quick cash and bail on you. https://property.phila.gov/Go to this link, put in your property address and look at the assessed value from 2023 to 2022. Also, if you live there, you can apply to the homestead tax exemption and save over $1000/yrHope this helps

Eric Greenberg · Answer

Most of us got a new real estate tax assessment for 2023 that was already due. Are you saying you believe your assessment is going up for 2023 or 2024? Have you checked on Atlas? You should have received a letter but it may have gone to your property rather than to you (may want to check what address is in Atlas).

For our properties I filed appeals months ago for 2023. Some Ive heard back from, others not yet. I assume you have an appraisal for the property when you bought it in 2022? Does that evaluation help your case?

Welcome to talk via DM if you want to get specific.

https://www.phila.gov/services...

How is tax assessed in Philadelphia PA

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