Committee Approves Bills to Close Property Tax Loophole

Would set restrictions on reassessment appeals

The Senate Finance Committee today (June 25) approved legislation designed to close a legal loophole that has resulted in property tax increases for many Pennsylvania homeowners, according to Committee Chairman Senator Pat Browne (R-16).

Senate Bill 1247, introduced by Senator James Rhoades (R-29), and House Bill 1438, introduced by Representative Tim Seip (D-125), would set specific limits regarding when a local government can reassess property. The bills would limit local taxing districts' ability to appeal an assessment only if a property is subdivided or when improvements are added or removed.

"Senator Rhoades and Representative Seip brought these bills forward in response to practices they have seen taking place in their area and around other parts of the Commonwealth where school districts were using sales of properties to impose what amounted to tax increases," Senator Browne said. "I am pleased to support these bills and report them out of my committee. It is my hope that the Senate will consider them quickly."

The Finance Committee held a public hearing on Senator Rhoades' bill in May. The hearing featured testimony from Pottsville homeowner Renee Maley and Allentown homeowner Jeff Barber, who were both victimized by a tax increase based on the purchase price of their homes.

Currently, Pennsylvania's Real Estate Assessment Law precludes a taxing body from appealing a property's assessed value following a purchase. However, when the purchase price of a property is dramatically different than its assessed value, a local government can argue to increase the assessed value of the property. Senator Rhoades argued that this loophole for local taxing authorities translates to a property tax increase for the homeowner.

"The reassessment process can be costly for taxpayers who have already been hit hard by rising property taxes over the last decade," Senator Rhoades said. "We need to ensure that any property tax increases after reassessments are based on actual improvements on the property, not just the sale value. Whether we call it an appeal, an assessment or anything else, the existing loophole results in property tax increases, and we should close it – as soon as possible."

The bills now go to the Senate Appropriations Committee for consideration.

Contact:

Stacey Connors (Senator Browne)
(717) 787-1349
Anna Fitzsimmons (Senator Rhoades)
(717)787-2637