Pennsylvania Real Estate Tax Discounts

You bought your first house; congratulations!  Now you will join other homeowners in paying property tax to your municipality, county and school district.  While you have no control over millage rates and little say in the assessed value assigned to your home, you can explore some discounts that are available to many homeowners.

Certain programs are available throughout the Commonwealth of Pennsylvania; others are specific to certain counties or cities.  The following three programs are available statewide.

Homestead Exclusion (Act 50):

This discount is determined as a finite dollar amount of reduction in assessed value, not as a percentage (i.e., owners of a $1 million home receive the same assessment reduction as a person owning a $50,000 home).  The owner needs to occupy the house as his/her primary residence.  This discount is funded from Pennsylvania slot machine revenue, and each school district determines the actual value of this discount per year.  Homeowners should contact their county assessment office for a copy of the application form.

Property Tax/Rent Rebate:

Certain Pennsylvanians aged 65 and older (along with widows/widowers aged 50 and older and people with disabilities aged 18 and older) are eligible for a rebate of property taxes paid (from $650 - $975 per year).  Income must be below a certain threshold, currently $35,000 per year.  Renters are also eligible to participate in this program, provided they meet the age and income tests.  The deadline to apply for this rebate program is June 30th of each year. Use Form PA 1000.

Tax Exemption for Disabled Veterans:

Those individuals who have a permanent service-connected disability with proven financial need may be eligible to receive a full exemption from property taxes.

Additionally, there are programs that are available in certain counties or cities.  Three examples of these types of programs are detailed below and are found in Allegheny County (Clean and Green) and the City of Philadelphia (Loop and Ordinance 1456-A).

Clean and Green (Act 156):

When a property owner has a minimum of ten contiguous acres, he or she can apply to have the property assessed at its value as agricultural use land rather than at fair market value.  The land must be actually used for agriculture or forest reserves. If it qualifies, a significant savings of property tax is possible, since agricultural use or forest reserve land is of a much lower value than residential fair market value.

Longtime Owner Occupants (LOOP):

When City of Philadelphia residents experience a significant increase in their property assessment, they may apply for a reduction via this program.  They must have lived in their homes for ten or more years and meet certain income and other eligibility requirements.

New Construction for Residential Properties (Ordinance 1456-A):

This ordinance provides for a ten-year abatement from real estate tax for new construction of residential properties.  Applications must be submitted within 60 days of the date the building permit is issued.

Information on these programs, as well as others, is available via your county’s website.  The significant savings available make it a worthwhile area to investigate.   With the money you save on your property taxes, you may be able to do some updates on your new home! For more information, please contact Schneider Downs or visit the Our Thoughts On blog.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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