Home Assessment vs. Selling Price (Property Tax) (Pittsburgh, Duquesne: sales, condos)

[pghcleak]

Okay, this is my last news story, I swear. I just wanted to know what everyone thought of this? Do you think any good will come of it from the Supreme Court?

"A Team 4 investigation found that some homeowners in the Pittsburgh area getting a bargain on their property taxes while others get a raw deal..."

Team 4: Huge Property Tax Cuts For Some, But Not All - Pittsburgh News Story - WTAE Pittsburgh (http://www.thepittsburghchannel.com/news/16203574/detail.html - broken link)

[BrianTH]

As an aside, I think the framing of that story is a little misleading, since it puts it in terms of wealthy versus non-wealthy areas. More accurately, the areas that benefit the most from a base year system are the ones that have appreciated the most since the base year, and conversely the areas that are harmed the most are the ones that have depreciated the most. Now, it is true that the higher appreciation areas tend to be wealthier areas like Shadyside, but other high appreciation areas are more middle class, like Lawrenceville or the South Side Slopes.

Anyway, yes it is unfair, but I don't know enough about Pennsylvania constitutional law to offer an opinion on the case. Ultimately, it may be a political issue, meaning people may have to put pressure on their elected officials to get something done about it.

[scrapp]

Originally Posted by pghcleak

Okay, this is my last news story, I swear. I just wanted to know what everyone thought of this? Do you think any good will come of it from the Supreme Court?

It is a fairly accurate story, but they totally missed the chaos the Base Year system has created in the Appeals process. The Appeals Board is all over the map and Homeowners and Taxing Bodies are appealing a load of cases to the Board of Viewers. The system is still punishing new home owners. Hopefully the PA Supreme Court will provide some clarity, but don't hold your breath...

[right-here-i-say]

I agree with the base year, however, many 2002 values are way under assessed (examples include houses selling last year for $700K that are assessed at $180K)

All the other counties around the area are at base year. A base year assessment keeps our county competitive. If somebody bought a house in Upper St Clair for $400K it and it was assessed at $400K, they would be paying over double in taxes than a house down the street in Peters Township. However, if they are assessed at what it SHOULD have been worth in 2002, they would be paying similar or a little more than Peters. Just because interest rates went down and people were able to pay more for a house, shouldn't mean they should pay more than their neighbors in taxes.

Now, in the areas that are underassessed, have they lowered the school teachers salaries the same % of the houses being sold have lowered? If not, then somebody has to pay these taxes. Somebody in Upper St Clair shouldn't have to pay school taxes for somebody in Duquesne. So sad but true, people in Duquesne have lost their value in their houses but still have to pay taxes.

However, the biggest issue is that people automatically think that assessed price should be sales price. Why? Assessed Prices throughout Allegheny County even in 2002 are off. I could go down my street, and 90% of the houses were not assessed properly in 2002 if you go by sale prices (except the homes that were sold in 2002, these people pay thousands more than neighbors in bigger homes)

I think a numbering system is more appropriate. A 3 br, 2 ba home with a certain size lot in an area gets a specific number from 1 to 100. This should not change due to sales price. The tax millage can change to pay for the services that need to be done. If the house goes down in value, the services still need to be done. If the house goes up 100% in value, services don't necessarily need to go up 100%.

Dan Onarotos change has basically stopped a windfall of tax money going to the teachers each year for newly assessed homes.

Maybe if we didn't assess newly sold homes when they are sold, we wouldn't be in the mess we are now.

[BrianTH]

Originally Posted by right-here-i-say

Somebody in Upper St Clair shouldn't have to pay school taxes for somebody in Duquesne.

This isn't on topic, but I wanted to note there is nothing obvious about this claim, meaning that the hyperlocal funding of schools in Western PA is not necessarily a good policy. Indeed, in our modern society and economy, it actually makes very little sense for public schools to be funded locally at all--personally, I would suggest a state/federal split.

For that matter, residential property taxes in general are not necessarily a good policy. Again just speaking personally, I would like to see most, if not all, residential property taxes shifted to income taxes.

But again, all that has nothing in particular to do with the assessment scheme.

[right-here-i-say]

Originally Posted by BrianTH

This isn't on topic, but I wanted to note there is nothing obvious about this claim, meaning that the hyperlocal funding of schools in Western PA is not necessarily a good policy. Indeed, in our modern society and economy, it actually makes very little sense for public schools to be funded locally at all--personally, I would suggest a state/federal split.

For that matter, residential property taxes in general are not necessarily a good policy. Again just speaking personally, I would like to see most, if not all, residential property taxes shifted to income taxes.

But again, all that has nothing in particular to do with the assessment scheme.

I think P.A. has tried to stop the local funding for a long time. Due to the way things usually happen in P.A. (example: trying to stop smoking in restaurants for 10 years), I don't see the local funding ever stopping.

A good thing about local funding is creates competition between districts.

My point was that if somebodys house value goes down, somebody still has to pay for the teachers/services and in our current system, it would need to be the people living in that district.

[BrianTH]

Originally Posted by right-here-i-say

A good thing about local funding is creates competition between districts.

Sure, it creates competition between school districts for wealthy residents. But the ultimate losers in that competition are children without wealthy parents, and all the future stakeholders in those children (their future employers, families, communities, and so on). And even in the short term, it promotes class segregation (e.g., wealthy people only living near other wealthy people, poorer people only living with other poorer people, and so on), which is not particularly good for today's communities either.

Nonetheless, I agree local funding of public schools is pretty well entrenched (in fact in part because those wealthy winners have powerful friends, thanks to their wealth). Still, since nothing we say here is likely to lead directly to changes in the real world, I might as well complain about the real problems, even if they are unlikely to be fixed just because I am complaining about them.

My point was that if somebodys house value goes down, somebody still has to pay for the teachers/services and in our current system, it would need to be the people living in that district.

Getting back to the original topic, a base year system is only a temporary solution to the problem of depreciation, and it actually makes the problem worse in the long run. What happens next is that some people don't want to buy into those districts because their property taxes will be higher than their purchase price would warrant, and that reduction in demand can lead to even more depreciation, which further widens the tax gap. That cycle can eventually leads to vacant properties, because the former owners can't find buyers. Those vacancies reduce the tax base, and the school district has no choice by to raise property tax rates on the remaining people. That makes the district an even less desirable place to buy property, and the whole cycle starts once more. And so on.

And again while I know merely complaining about this is unlikely to change anything, this sort of vicious cycle is a well-known problem with property taxes (meaning they have a tendency to amplify any problems a local area may experience, sometimes helping to turn what should only be a moderate problem into a major crisis). So, that is in fact the fundamental problem with the tax scheme.

[Copanut]

If every home is properly assessed, and it can be done, then the millage rates should go down.

[right-here-i-say]

Originally Posted by BrianTH

And again while I know merely complaining about this is unlikely to change anything, this sort of vicious cycle is a well-known problem with property taxes (meaning they have a tendency to amplify any problems a local area may experience, sometimes helping to turn what should only be a moderate problem into a major crisis). So, that is in fact the fundamental problem with the tax scheme.

What you have described is a lot of Pittsburgh. I don't think we will see a difference in our lifetime. I could be wrong. The places closest to the city have the best chance, meaning there could be homes destroyed and condos put in, which will help.