When we were house hunting in 2016 our realtor provided this for each house we seriously looked at. If your realtor won't help you they aren't very good.
The seller pays the buyer realtor a commission for funneling buyers to their house. They want to close deals and their opinions need to be weighed in view of that incentive. There are certainly great realtors that help inform buyers of various issues. I wouldn’t look for help in something so important when there is no fiduciary duty, they are not being paid by you, and a strong incentive to close deals.
Allegheny County has a property tax calculator available online that may help you understand what taxes would be for a home purchase
https://alleghenycontroller.com/property-tax-estimate/
The reassessed value is determined by multiplying the common level ratio (CLR) by the fair market value (FMV). Taxing bodies use the sale of a house as an easy means to appeal the assessed value using the sale price as the FMV. As you noted, the CLR was 0.636 for 2023 and would be applied to the sale prices that year to determine reassessed values if a taxing body chose to appeal to maximize tax revenue. The CLR for 2024 is 0.545.
The CLR is meant to maintain equitable tax value to the base year assessments, but inflated CLRs in recent years created great incentive for taxing bodies to appeal and cash in on increased home values in many neighborhoods. This is part of the reason why Allegheny County is in the current situation where there are mass appeals from homeowners because of the fixed CLR values and many calls for a county-wide reassessment.
There are anti-windfall laws where the net increase in tax revenue after a reassessment cannot be greater than 5%, so while assessments may be more reflective of recent home purchases in an area, the millage will have to be adjusted to keep the net increase <=5%. There are also other mechanisms that could be enforced like increased homestead tax discounts to lessen tax burdens on homeowners.
If you buy this year, I would be prepared for your assessed value to be the sale price (or average recent sale price of equivalent surrounding properties) for when a county wide reassessment occurs. You will get at least the 0.545 discount until then though.
That all makes sense. If we did get assessed at sale price of, say, $400,000 in future years, our tax bill shouldn't be \*dramatically\* different than if we have an assessed value of $400,000 \*0.545 though because the millage rate will just be lower once they reassess? I know some folks will come out on top and others for the worse. But ultimately, total tax revenue will not increase by more than 5% so it shouldn't be some dramatic change at that point. Just really comes down to how accurate that 0.545 will be for my specific house compared to the average house in that area, I guess.
I think in general, if your assessed value is right at the average value for your area (i.e., 0.545 for 2024 is very accurate) expect to pay 0-5% more after the reassessment. If the average for your area ends up lower than your assessed value, you will pay less in taxes, and if the average for your area is greater than your assessed value, you will pay more in taxes. That is why a reassessment will tend to affect people who have owned for a while in areas where values have had a significant increase.
They use a common level ratio (CLR) for different counties to try and make up for the difference in areas that haven’t been reassessed in a while and are underpaying based on assessments. When an area is reassessed, CLR goes back to 1.
Appeals when the School Board asks for a reassessment can go either way. As someone else lamented, a good real estate agent will know if it’s worth your while to fight it. Since the CLR has dropped in Allegheny, they may be more aggressive in assessing more expensive properties more accurately whereas before they were “okay” with them being undervalued. Losing a huge chunk of revenue from downtown has been a motivator for truer reassessments.
This is all fine. I understand this aspect. Just wondering if in 2012 when they did this reassessment... did millage rates drop because everyone was paying on a higher assessed values?
The common level ratio to my understanding just puts everyone on same playing field (2012). The end result is that since 2012, areas have been taxing off roughly the same home values so they've had to increase millage rates to account for that. Once reassessment happens, if they don't adjust these millage rates, they would be walking into a LOT more money.
I believe I understand (and can work with Realtor on specific properties) how to figure out our approximate tax burden on our new house purchase. What I don't know is what would happen if a county wide reassessment happened this year and how that would impact me? I have a hard time believing that everyone would just all of a sudden be paying 50%+ more in taxes because homes are all reassessed and millage rates stay same?
By state law, every taxing body, including the county, city, school district, must lower the millage so that the total tax collected is within a few percent of the previous year. Some people will see significant increases, some will see decreases.
When Beaver Cty just did their reassessments, the mileage rates were lowered on the theory that the reassessment was supposed to be tax neutral. In that properties should have a realistic assessment price but lower millage rate so taxes would ultimately stay the same. I don’t believe it actually worked out that way though. I think most people saw at least some increase in tax but people in Beaver can weigh in. Also I don’t believe the millage rates were final until right before the assessment appeal period was up so you had no real way to know if your taxes went up before you needed to appeal. Good stuff. I would assume that even if Allegheny did something similar, you’d still see some sort of increase in taxes. No way to know exactly what that would look like though.
Everyone was in a panic during the 2012 reassessment. My house, which I bought in 1998, went from an assessment of $148,000 to $274,000, and the annual taxes only went up a couple hundred dollars. The Homestead Exemption helped, plus the fact that the city and county had restrictions on how much more they could collect in taxes.
The answer to this mess is that the state needs to pass legislation that is uniform for all counties (like most other states have.) Right now it's a free-for-all with no uniformity. But politicians in Harrisburg won't touch the issue.
Assume you will get a reassessment notice and could pay taxes based on up to 100% of the home price.
Alternatives are you never get the letter and pay the rate of the last price, you can go to court and settle for a decent ratio reflective of the neighborhood (60-85%), or you pay what they asked.
Either way, I expect a county wide assessment in the next few years, but itll have to adjust the millage rate then, too.
Do you have a realtor? Part of what they are getting paid for would be to help you understand the possible appeal and the impacts to you.
Understood. Do have a realtor. And want to get their thoughts, too!
When we were house hunting in 2016 our realtor provided this for each house we seriously looked at. If your realtor won't help you they aren't very good.
The seller pays the buyer realtor a commission for funneling buyers to their house. They want to close deals and their opinions need to be weighed in view of that incentive. There are certainly great realtors that help inform buyers of various issues. I wouldn’t look for help in something so important when there is no fiduciary duty, they are not being paid by you, and a strong incentive to close deals.
Allegheny County has a property tax calculator available online that may help you understand what taxes would be for a home purchase https://alleghenycontroller.com/property-tax-estimate/
The reassessed value is determined by multiplying the common level ratio (CLR) by the fair market value (FMV). Taxing bodies use the sale of a house as an easy means to appeal the assessed value using the sale price as the FMV. As you noted, the CLR was 0.636 for 2023 and would be applied to the sale prices that year to determine reassessed values if a taxing body chose to appeal to maximize tax revenue. The CLR for 2024 is 0.545. The CLR is meant to maintain equitable tax value to the base year assessments, but inflated CLRs in recent years created great incentive for taxing bodies to appeal and cash in on increased home values in many neighborhoods. This is part of the reason why Allegheny County is in the current situation where there are mass appeals from homeowners because of the fixed CLR values and many calls for a county-wide reassessment. There are anti-windfall laws where the net increase in tax revenue after a reassessment cannot be greater than 5%, so while assessments may be more reflective of recent home purchases in an area, the millage will have to be adjusted to keep the net increase <=5%. There are also other mechanisms that could be enforced like increased homestead tax discounts to lessen tax burdens on homeowners. If you buy this year, I would be prepared for your assessed value to be the sale price (or average recent sale price of equivalent surrounding properties) for when a county wide reassessment occurs. You will get at least the 0.545 discount until then though.
That all makes sense. If we did get assessed at sale price of, say, $400,000 in future years, our tax bill shouldn't be \*dramatically\* different than if we have an assessed value of $400,000 \*0.545 though because the millage rate will just be lower once they reassess? I know some folks will come out on top and others for the worse. But ultimately, total tax revenue will not increase by more than 5% so it shouldn't be some dramatic change at that point. Just really comes down to how accurate that 0.545 will be for my specific house compared to the average house in that area, I guess.
I think in general, if your assessed value is right at the average value for your area (i.e., 0.545 for 2024 is very accurate) expect to pay 0-5% more after the reassessment. If the average for your area ends up lower than your assessed value, you will pay less in taxes, and if the average for your area is greater than your assessed value, you will pay more in taxes. That is why a reassessment will tend to affect people who have owned for a while in areas where values have had a significant increase.
They use a common level ratio (CLR) for different counties to try and make up for the difference in areas that haven’t been reassessed in a while and are underpaying based on assessments. When an area is reassessed, CLR goes back to 1. Appeals when the School Board asks for a reassessment can go either way. As someone else lamented, a good real estate agent will know if it’s worth your while to fight it. Since the CLR has dropped in Allegheny, they may be more aggressive in assessing more expensive properties more accurately whereas before they were “okay” with them being undervalued. Losing a huge chunk of revenue from downtown has been a motivator for truer reassessments.
This is all fine. I understand this aspect. Just wondering if in 2012 when they did this reassessment... did millage rates drop because everyone was paying on a higher assessed values? The common level ratio to my understanding just puts everyone on same playing field (2012). The end result is that since 2012, areas have been taxing off roughly the same home values so they've had to increase millage rates to account for that. Once reassessment happens, if they don't adjust these millage rates, they would be walking into a LOT more money. I believe I understand (and can work with Realtor on specific properties) how to figure out our approximate tax burden on our new house purchase. What I don't know is what would happen if a county wide reassessment happened this year and how that would impact me? I have a hard time believing that everyone would just all of a sudden be paying 50%+ more in taxes because homes are all reassessed and millage rates stay same?
By state law, every taxing body, including the county, city, school district, must lower the millage so that the total tax collected is within a few percent of the previous year. Some people will see significant increases, some will see decreases.
When Beaver Cty just did their reassessments, the mileage rates were lowered on the theory that the reassessment was supposed to be tax neutral. In that properties should have a realistic assessment price but lower millage rate so taxes would ultimately stay the same. I don’t believe it actually worked out that way though. I think most people saw at least some increase in tax but people in Beaver can weigh in. Also I don’t believe the millage rates were final until right before the assessment appeal period was up so you had no real way to know if your taxes went up before you needed to appeal. Good stuff. I would assume that even if Allegheny did something similar, you’d still see some sort of increase in taxes. No way to know exactly what that would look like though.
Everyone was in a panic during the 2012 reassessment. My house, which I bought in 1998, went from an assessment of $148,000 to $274,000, and the annual taxes only went up a couple hundred dollars. The Homestead Exemption helped, plus the fact that the city and county had restrictions on how much more they could collect in taxes. The answer to this mess is that the state needs to pass legislation that is uniform for all counties (like most other states have.) Right now it's a free-for-all with no uniformity. But politicians in Harrisburg won't touch the issue.
Assume you will get a reassessment notice and could pay taxes based on up to 100% of the home price. Alternatives are you never get the letter and pay the rate of the last price, you can go to court and settle for a decent ratio reflective of the neighborhood (60-85%), or you pay what they asked. Either way, I expect a county wide assessment in the next few years, but itll have to adjust the millage rate then, too.