Two-bill plan emerging for reassessments (Pittsburgh, Harrisburg: 2013, rental, employment)

[gg]

Originally Posted by BrianTH

Again, I think it will be hilarious if and when h_curtis finds out his taxes went down as a result of the reassessment.

They won't go down. Our school district goes after everyone all the time. To be quite honest, Fox Chapel School district homes should be exempt from some drive by country reassessment. The school has us all in court all the time. Both my homes in the district have had the school challenge my assessments. Do I really need some guy from Ohio driving by my home and telling me what he feels the value is? At least the school district hires a local firm Sheer and Associates to fight me. Now I will be fighting against some dope from Ohio driving around in a car. My home looks like a $500K home from the outside because it looks huge. It is much smaller than it looks from the outside. That being said, I wouldn't be surprised if I see a 100% increase when the letter comes along.

[BrianTH]

Originally Posted by UKyank

I would think pegging a house to its actual sale price everytime it is resold with an increase for inflation yearly would be a much simpler way to go about things

That's extremely easy to game with sales at artificially low prices. So you have to put in a system to catch such sales, which can easily end up more costly and basically amounts to the same thing (you need to generate some sense of what a fair market value would be to catch the people gaming the system).

It also doesn't address people being overtaxed for properties where prices have stagnated or gone down (the basis for the lawsuit that led to this reassessment). The courts have held that violates the state constitution, so in PA you need a reassessment system that can handle such scenarios.

A lot of these problems would actually be greatly lessened if we just did reassessments a lot more often. The changes would be smaller, there would be better error correction through appeals, more consistent collection of data, and so on.

[BrianTH]

Originally Posted by h_curtis

They won't go down.

We'll see.

[squarian]

Anti-Windfall Legislation explained
taken from The Pennsylvania Legislator's Municipal Handbook, 3rd Edit (2007)
(see legislative citations in this link's text for full details)

Prior to 2004, the assessment laws contained provisions limiting the amount of real estate tax revenues
that could be levied by a political subdivision in the year following a countywide reassessment or a
change in the predetermined ratio. These provisions are commonly referred to as the “anti-windfall” provisions.
The laws required a political subdivision to reduce its millage rate so that the total amount of
taxes levied on the properties in the year following a reassessment increased by no more than a specified
percentage from the previous year.

In 2004 and 2005, three bills were signed into law which changed the implementation of the anti-windfall
procedures by political subdivisions. The assessment laws now require political subdivisions to follow a
“two-step” process when increasing real property taxes by a percentage allowed by law following a countywide
reassessment. The first step requires a political subdivision to establish a revenue-neutral millage
rate. The second step is optional. By a separate vote, a political subdivision may institute a final tax rate
that limits the total amount of taxes levied to no more than the maximum percentage increase permitted
by the assessment laws.

In 2006, the Taxpayer Relief Act (Special Session Act 1) was enacted. Act 1 contains a new anti-windfall
provision which applies school districts. Section 327 directs that after a countywide reassessment,
a school district which, after July 1, 2006, for the first time levies its real estate taxes on that revised assessment
or valuation must reduce its millage rate so that the total amount of taxes levied on the properties
subsequent to the reassessment increases “less than or equal to the index for the preceding year.” Section
327 does not require the “two-step” process that exists in the current assessment laws.
As a result of the passage of Act 1, two standards now exist for implementing the anti-windfall procedures
following a countywide reassessment: one for school districts and one for counties and municipalities.

[greg42]

Originally Posted by juniorv130

So, polling of users:

Is buying a house in an Allegheny county suburb silly? Should I just stick to Washington.

(I fully understand that there are missing facts here...)

It's not silly period to buy in Allegheny Co. There are obviously advantages to being inside Allegheny vs outside, although the degree to which those matter depends upon your own situation. If you're commuting to downtown Pittsburgh, sticking to Washington Co. vs where you are buying makes your commute significantly longer.

I think it's way more silly to back out of a done deal based solely on the assessment chatter on this message board. If some increase in taxes is that big of a concern it is likely you are spending too much for your income level or simply putting too much emphasis on "OMG taxes!"

[BrianTH]

Note part of the purpose of the two-step process was to help make it more transparent exactly what the revenue-neutral rate should be, and how much the jurisdiction in question was increasing its revenues (if at all). While the school district procedure may seem looser, the Index is well-established and applies mechanically, so school districts actually have even less discretion, unless they want to increase less than their Index.

Anyway, as I noted before, a court is now actively overseeing this entire process. It is conceivable some jurisdictions will still try to get something past the court, but it will definitely be much harder this time.

[juniorv130]

Greg- thanks a lot for that. Definite real advice. It's my the OMG taxes! Thing that has me
Concerned its the fact that some are reporting a 400% increase.

[Scott2187]

Originally Posted by greg42

It's not silly period to buy in Allegheny Co. There are obviously advantages to being inside Allegheny vs outside, although the degree to which those matter depends upon your own situation. If you're commuting to downtown Pittsburgh, sticking to Washington Co. vs where you are buying makes your commute significantly longer.

I think it's way more silly to back out of a done deal based solely on the assessment chatter on this message board. If some increase in taxes is that big of a concern it is likely you are spending too much for your income level or simply putting too much emphasis on "OMG taxes!"

I agree with this. If you are worried, you can look up the 2012 assessment on the county website now:

Allegheny County Assessment

BTW: the house i'm currently waiting to close on went up 50% in total market value.

[gg]

Originally Posted by BrianTH

That's extremely easy to game with sales at artificially low prices. So you have to put in a system to catch such sales, which can easily end up more costly and basically amounts to the same thing (you need to generate some sense of what a fair market value would be to catch the people gaming the system).

Really? You are incorrect! Of the hundreds and hundreds of sales I have done the percentage of buyers trying to drop the sales price was tiny. It isn't as easy as you think. For example you have to be a cash buyer. How many people pay cash? Not many and I sold high end real estate and would encounter that more than most.

You can't just go to closing and plug in some sales price. You can deduct some things if you are not financing, but if you are financing, you will go through at full price. That is well over 90% of the time. Those who are paying cash can legally get a break. For example you can pull the commission out if there is one. You can pull 1/2 of the transfer tax out of purchase price. You COULD try and pull out some chattel. Better be very careful with that. Do you want to go to jail? Chattel is something real estate agents are not to get involved with. That would have to be a separate agreement between buyer and seller. BOTH parties need to agree with some chattel. In other words BOTH have to take a risk on that. How many do that? Almost none. Do you really want to pull that chandelier out of the sales agreement that is maybe worth $10K? How much savings are you getting out of that risk?

Sales compatibles is much more accurate than some drive by appraisal. Remember Brian, when I go to court for the millionth time, I will be walking in with sales comparisons. Hello? SALES! That is my defense in court and it is the most accurate way of fighting some silly drive by appraisal.

[BrianTH]

Originally Posted by h_curtis

Of the hundreds and hundreds of sales I have done the percentage of buyers trying to drop the sales price was tiny.

Of course under the current tax system, they don't have the same incentives.

Sales compatibles is much more accurate than some drive by appraisal.

As an aside, the reassessment is in fact using sales of other properties as part of its computer model.