Real estate taxes can be complicated, especially figuring out exactly what you owe, and why. We put together this guide so you can quickly get up to speed on Philadelphia real estate taxes without skimming through a 74-page PDF from the Department of Revenue.
A property tax is a municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The local governments impose these taxes fund school districts and make industrial repairs.
So you’re looking to move into Philadelphia, how much is this going to cost you?
Tax Rate and Property Assessment
The market value of the home determines the property tax. The Office of Property Assessment (OPA) will establish the value of the property and from there, you will be responsible for 1.3988% of the assessed value. The OPA assess properties based on their size, age, location and use (home or business).
The tax bill is issued on the first day of the year and payment is due before/on March 31. However, if you pay before the last day of February, you are entitled to a 1% discount. For example, if your property is assessed at a $250,000 value, your annual property tax will be about $3,497. At this value, paying before the last day in February will save you around $35.
If you disagree with the assessed market value of your property, you can file an appeal with the city of Philadelphia.
It would be who of you to pay your taxes on time if not early. Should you fail to pay your property taxes on time, the city will charge you with interest. The additional payments will accumulate at the rate of 1.5% per month, beginning April 1 until January 1 of the following year. If you find yourself withholding payments until January 1st of the following year, the city of Philadelphia is entitled to:
- A 15% addition to the principal balance
- Register your taxes as delinquent
- Liens are filed (A lien is a notice attached to your property telling the world that a creditor claims you owe it some money)
- Begin the process of selling your home
With rates as low as 0.90% within the state of Pennsylvania, Philly is certainly not the cheapest county to own property. Fortunately, if you qualify as low income or are a senior, the city will work with you on the amount and date of payment.
Installment plans can be made for residents who are in the lowest tax bracket based on their monthly income. While you are typically supposed to have the payment in by March 31, those who are eligible can pay their property taxes through installments over 12 months. You do not qualify for the above installment plan if your household income per-person is greater than the amount below.
Specifically for seniors, the city of Philadelphia will freeze property taxes. If the rate of property tax increase, seniors can pay the rate they originally purchased the house with. You are entitled to a property tax freeze if you are:
- A person 65 years or older
- A person who lives in the same household with their spouse who is 65 years or older
- A person aged 50 years or older who is a widow of someone who has reached the age of 50 before passing away
Similarly to property tax deductions, some people in Philadelphia are exempt from paying this tax completely. Non-profit organizations with storefronts are not required to pay a property tax. Also, in order to encourage the rehabilitation of neighborhoods, Philadelphia offers abatements during the duration of construction. The city is also sensitive to catastrophic loss. If a fire or natural disaster affected your residence or business, you are not obligated to pay a property tax while it’s being repaired.
Just about anywhere in the world, the newer, bigger and more luxurious your property is, the more you will pay. The same is true in Philadelphia.