A couple is planning to tour the United States in a travel trailer during their first few years of retirement. They are going to sell their current home now and purchase another home when they
Common Myths About The Lancaster County Property Tax Reassessment
Ever since Lancaster County announced that it would conduct a county-wide property tax reassessment, there have been myths circulated as facts by residents that don't understand the reassessment. And as is the case with most myths, somehow they get bantered around as facts and cause people to formulate false assumptions that have nothing to do with reality. So let's start shattering some myths.
MYTH: I got my new reassessment in the mail and it went up $25,000. I'm going to get killed when I get my next tax bill.
Take a deep breath. Not necessarily.
There are two factors used when calculating a property's real estate taxes. Here is the basic formula: Assessed Value X Millage Rate = Real Estate Taxes.
During a reassessment year in Pennsylvania, millage rates must be adjusted so that a taxing jurisdiction (i.e. county, municipality, school districts) doesn't collect any more taxes than it did the previous year prior to the reassessment. In other words, the amount collected must be revenue neutral. As a result, you could have some property owners pay more, some will pay less, and for some, it will be a wash.
If the county and municipality feel they need to increase total tax revenue during a reassessment year to cover costs, they have to hold a special vote. However, the additional revenue is capped at 10% from the preceding tax year. School districts have a lower cap which is provided by the State Department of Education. At present, that index is around 2-3%.
MYTH: This is just another government scam to grab more money.
Not really. The reason for a reassessment is to better reflect the true value of real estate for tax purposes.
The last time a county wide property reassessment was conducted was 2005. That was twelve years ago. A lot has happened to real estate values over that period of time. We had a run up on property values from 2005-2007. Then the Great Recession hit and real estate in general took a hit. Over the past couple of years, real estate property values have rebounded. That's a lot of ups and downs for property values over the past decade.
A reassessment is done to make sure that an assessment is reflective of today's real estate values.
MYTH: It really ticks me off that some pencil pusher in the government has the power to assess my property's value at an unrealistic figure.
Let's take a moment to dive into how your assessment is determined.
Lancaster County has hired Certified Pennsylvania Evaluators (CPE) to determine the fair market value of a property. CPE's can't pick a number out of thin air and hand out unrealistic property values based upon a whim. They have to use market data.
Fair market value is determined in the marketplace, when a willing seller sells to a willing buyer in an arm’s length transaction. The process of determining this value involves the analysis of recent sales within the county over a certain time period. Only valid sales, which reflect transactions on the open market will be used in a CPE's analysis.
Still don't think your assessment is correct? Any property owner can appeal an assessment if they think the number is too high. The procedure to appeal an assessment can be found on the Lancaster County Property Assessment Office's website.
MYTH: It's unfair that renters in Lancaster County don't pay property taxes.
There is no such thing as a free lunch. Someone has to pay for it. Property taxes are no different.
The owner of any investment property has a number of expenses that they must cover in order to break even or make a profit. Some of these expenses include property insurance, utilities, maintenance/repairs, mortgage payments, and property taxes. Landlords will typically add all these expenses up, divide this expense by the number of units in the investment property to determine the rent that they must charge tenants in order to break even on their investment.
So even though the tenant receives no property tax bill because they don't own the property, they are paying a portion of the taxes because it is built into their rent.
Tom Blefko is the Vice President of Operations for RE/MAX Pinnacle. He is originally from Lancaster, PA and is a graduate of Franklin & Marshall College with a B.S. in Business Administration. He en....