LEGAL GUIDE
Written by attorney Joshua Upin | Apr 23, 2013

Philadelphia's Actual Value Initiative (AVI) and the Effect on 2014 Property Tax Liability

How Philadelphia Property Taxes Work

All property owners in the City of Philadelphia are liable to pay tax on the assessed value of the real estate they own according to City and State law.See Philadelphia Code Chapter 19-1300 & 72 P.S. § 5020-201.

The Office of Property Tax Assessment determines the value of the property on which taxes must be paid.

The tax rate, or millage rate, is the amount per $1000 of assessed property value used to calculate the final tax liability

(Assessed Property Value) x (Millage Rate) = Tax Bill

The millage rate for 2013 is 9.771%. So, assuming for example that your property has an assessed value of $30,000.00, the tax liability calculation would look like this

$30,000 x 9.771% = $2931.30

How the Actual Value Initiative is Disproportionately Affecting Northern Liberties

The Actual Value Initiative or AVI is City Hall’s attempt to bring property tax valuations in line with market valuations. Up until now most property owners assessed value for property tax purposes was a small fraction of the actual market value of the real estate. So for example, someone who purchases a new home in Northern Liberties in 2013 for $200,000 the assessed value of the home might be something like $20,000.

The AVI sees that that assessed value of $20,000 is brought up to the market value level of $200,000. With a higher assessed value the amount of tax will necessarily increase for 2014.

Since Northern Liberties has been such a hot pocket of real estate development over the last ten years the market value of property in this area has generally outpaced increases in real estate values elsewhere in the city – even in spite of the depressed state of the market over recent years. What’s worse, many long-term residents who bought into the neighborhood before the boom years, because they were priced out of other neighborhoods in the City, are now being punished for venturing to the outer limits of center city and building such a vibrant and unique community here.

The Actual Value Initiative is still up in the Air in Many Respects

City Council has yet to reach consensus on the municipal operating budget and has not even officially voted yet to implement the actual value initiative. Moreover, City Council has yet to set the millage rate for 2014 real estate taxes. By most accounts though, the rate will likely fall somewhere in the range of 1.25% and 1.5%.

Don’t wait for City Council to make a decision on the millage rate – take control now – because whatever happens its almost certain your tax liability is going to increase and increase significantly. Explore your options for an Actual Value Initiative appeal with a qualified attorney.

Because the methods and data which the Office of Property Assessment used for the Actual Value Initiative are shrouded in mystery and riddled with logical inconsistencies, and because there is widespread public discontent with the way the AVI has been administered and implemented. As such there is perhaps a higher likelihood that an appeal of your current assessment will be successful in reducing your tax liability for the foreseeable future.

Other Helpful Resources

Committee of Seventy – City Council Budget Analysis

Philadelphia Office of Property Assessment (OPA)

OPA First Level Appeal Forms

Councilman Bill Green

The Northern Liberties Neighbors Association

Perspective on the AVI from NLNA President Matt Ruben

DISCLAIMER: no part of the information contained in the above blog post, or this website generally, is intended as legal advice or to create an attorney client relationship between publisher and reader.

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