Help me understand property taxes in Pennsylvania

[Anonymous]

We get slammed what seems like every single year with tax increase in MoCo due to increased assessment of our property. Meanwhile, I've been looking at homes in PA and constantly find they pay massive amounts of taxes relative to the assessment of property. It seems like the entire state of Pennsylvania assesses homes at a fraction of their current market value, why is this? Is it because they'd make everyone go homeless due to gigantic tax increases that would happen if they forced a state wide reassessment to tax current market value of homes?

Example 1:

https://www.zillow.com/homedetails/100-Monument-Ave-Malvern-PA-19355/9135796_zpid/

This house going for $1.2M only pays about $8k.tax because tax assessment is only $230k. The house has basically not gone up in terms of reassessment for tax since the year 2000 if you're including inflation.

Example 2:

https://www.zillow.com/homedetails/1740-Lenape-Rd-West-Chester-PA-19382/335727182_zpid/

House over $4M pays $30k tax, but the assessment is only for $890k. So of PA one day decided to reassess this property for it's true value of $4M, the tax bill with be a massive $150k or so since the assessment increased by 5x?


Why is PA like this? Assessments are so, sooo low. Their property taxes would seem like they'd be absolutely astronomical if they actually decided one day to assess homes at current market values rather than keep using values that seem to be stuck from 1996. Why is PA like this? Has there ever been talk about reassessing homes according to fair market value to increase taxes? Is this an potential massive risk for buying in PA? One day the govt decides to reassess and all of the sudden your $8k tax bill in PA goes up to $30k? If you buy a home in PA, do these old assessments artificially keeping taxes low transfer to the new buyer, or will you be body slammed with a reassessment as a new owner and according to the amount you paid for the home? PA taxes seem massively high and also simultaneously way out of whack because they're hardly ever adjusted.

[Anonymous]

I haven’t studied PA property tax. But our families all live there and all pay far more than us for properties that are valued at 25-40% of ours. It’s a heavily taxed area.

[Anonymous]

Don't fall fir the idea that they won't raise the assessment rate. We did. A year after we moved the county requested a "spot assessment " of just our house. They raised our assessment to our purchase price and tripled our taxes. Only our house. We went to court to fight it and got them to take 5% off but it is still crazy compared to all of the properties around us. We have noticed that this happens to owners that move in from other areas. When we moved here we had planned to stay forever. Now we plan to move as soon as the kids are out of school. We just can't justify paying the high taxes.

[Anonymous]

My parents live in PA, and (at least where they live) property assessments are only updated when the house is sold. So when you buy a house, you will pay way more than the previous owners who lived there for a long time, and much more than your neighbors in similar homes who have lived there for years. But in ten years, you’ll still be paying based on that assessment, and your new neighbor who buys in 2034 will pay much more than you.

[Anonymous]

Anonymous wrote:I haven’t studied PA property tax. But our families all live there and all pay far more than us for properties that are valued at 25-40% of ours. It’s a heavily taxed area.

Yes. Property tax in PA is huge. But the only reason people aren't homeless is because it seems like they never adjust reassessments. If they did, so many people would be paying more than $30k a year in property tax on modest homes.

[Anonymous]

Anonymous wrote:My parents live in PA, and (at least where they live) property assessments are only updated when the house is sold. So when you buy a house, you will pay way more than the previous owners who lived there for a long time, and much more than your neighbors in similar homes who have lived there for years. But in ten years, you’ll still be paying based on that assessment, and your new neighbor who buys in 2034 will pay much more than you.

That's a back breaker then. Lets say you're paying about $6k in property tax on an $800k home because it's only assessed at $200k. No way we could afford a $24k tax bill if updated at sale because the assessment value was now $800k.

It just seems like PA has a huge distortion in their market because they artificially keep assessments aggregiously low.

[Anonymous]

I don't think there's a statewide tax policy. Property taxes are dictated by the local town/township, which can and do vary widely. Some Philadelphia suburbs have low taxes, others have much higher taxes and corresponding lower housing prices. Main Line has fairly low property taxes. Philadelphia has lowish property taxes but the wage tax more than makes up for it.

[Anonymous]

Delaware also does not adjust

[Anonymous]

Anonymous wrote:Delaware also does not adjust

Which seems nuts, because of one day progressives take over and complain about equity, they could decide to reassess everything so that the tax base for property taxes would be modernized to make sure 'people pay their fair share'. It seems like a massive risk to move to states or areas where they don't constantly update their assessments. Assuming assessments will never go up is a gigantic gamble. One day you could wake up to a tax bill that quadruples due to some progressive pols getting aggressive. Your low tax bill is entirely predicated on politics never changing.

[Anonymous]

Anonymous wrote:I don't think there's a statewide tax policy. Property taxes are dictated by the local town/township, which can and do vary widely. Some Philadelphia suburbs have low taxes, others have much higher taxes and corresponding lower housing prices. Main Line has fairly low property taxes. Philadelphia has lowish property taxes but the wage tax more than makes up for it.

+1, it varies by town -- both the taxes themselves and how assessments are conducted.

OP is looking at a high tax area (Main Line) and is also specifically looking at high value homes (yes, A $1.2m home is high value, don't let DMV prices confuse you) that haven't sold in many years. But in most of PA, taxes are lower and the vast majority of homes are much less expensive. So even in places considered to have high taxes (usually due to schools being very well funded), you are talking about 400k homes with a tax bill of 6-8k. Yes, still burdensome, but totally within reach for a MC or UMC family.

It's also extremely common for a family to sell a house in a high tax area after kids are through school and in many places you could move just a town over and buy the same house for 100k less and half the tax bill (but very mediocre schools). And you'll get top dollar for the house you sell because of the good schools.

It's very different than in MoCo where you have a huge county all paying the same tax rates even though school quality varies widely. And you might have to move an hour or two away to get cheaper housing and lower tax rates.

[Anonymous]

Anonymous wrote:I don't think there's a statewide tax policy. Property taxes are dictated by the local town/township, which can and do vary widely. Some Philadelphia suburbs have low taxes, others have much higher taxes and corresponding lower housing prices. Main Line has fairly low property taxes. Philadelphia has lowish property taxes but the wage tax more than makes up for it.

Philly has (or used to have) extremely low property taxes in order to encourage people to buy in the city.

My relatives live in middle of nowhere PA and pay $4000 on a $200k market value house. That is a much higher tax rate than here…I do think the assessed value is close to that, so where they live either recently assessed or does so on a more regular basis.

I do wonder if new homeowners pay attention to this stuff in addition to mortgage amounts…I suppose it’s a good thing many banks escrow property tax in the mortgage payment.

Of course, NJ and NY property taxes are insane (maybe only NYC suburbs?) in addition to high income tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Delaware also does not adjust

Which seems nuts, because of one day progressives take over and complain about equity, they could decide to reassess everything so that the tax base for property taxes would be modernized to make sure 'people pay their fair share'. It seems like a massive risk to move to states or areas where they don't constantly update their assessments. Assuming assessments will never go up is a gigantic gamble. One day you could wake up to a tax bill that quadruples due to some progressive pols getting aggressive. Your low tax bill is entirely predicated on politics never changing.

Yes, but very very few politicians are OK with being one-termers. Quadrupling voters’ tax bills will get you voted out, no matter how “good” the rest of your politics are.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Delaware also does not adjust

Which seems nuts, because of one day progressives take over and complain about equity, they could decide to reassess everything so that the tax base for property taxes would be modernized to make sure 'people pay their fair share'. It seems like a massive risk to move to states or areas where they don't constantly update their assessments. Assuming assessments will never go up is a gigantic gamble. One day you could wake up to a tax bill that quadruples due to some progressive pols getting aggressive. Your low tax bill is entirely predicated on politics never changing.

This is only an issue for people buying expensive homes, or who are lucky enough to buy a home that massively appreciates. Most people own homes worth way less so even if their tax bill triples or quadruples, their current taxes are so low that it would not even matter that much.

Also higher taxes are tied directly to city services. If your tax bill is going up to pay for the fantastic schools or great parks and amenities, well-- how else can they pay for those.

I am not going to sit around worrying about the possibility that my 500k house in a great area with wonderful schools might double in value and then "of no!" I'll gain a half million in equity in a place where it will be easy to sell because it's appealing to live there, and have to pay a tax my fraction of that equity in property taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Delaware also does not adjust

Which seems nuts, because of one day progressives take over and complain about equity, they could decide to reassess everything so that the tax base for property taxes would be modernized to make sure 'people pay their fair share'. It seems like a massive risk to move to states or areas where they don't constantly update their assessments. Assuming assessments will never go up is a gigantic gamble. One day you could wake up to a tax bill that quadruples due to some progressive pols getting aggressive. Your low tax bill is entirely predicated on politics never changing.

This is only an issue for people buying expensive homes, or who are lucky enough to buy a home that massively appreciates. Most people own homes worth way less so even if their tax bill triples or quadruples, their current taxes are so low that it would not even matter that much.

Also higher taxes are tied directly to city services. If your tax bill is going up to pay for the fantastic schools or great parks and amenities, well-- how else can they pay for those.

I am not going to sit around worrying about the possibility that my 500k house in a great area with wonderful schools might double in value and then "of no!" I'll gain a half million in equity in a place where it will be easy to sell because it's appealing to live there, and have to pay a tax my fraction of that equity in property taxes.

Not true at all.

$6k tax bill on this $460k home:

https://www.zillow.com/homedetails/1406-Greywall-Ln-Wynnewood-PA-19096/9956995_zpid/


That’s only because the home is assessed at $153k. Are you really going to say with a straight face that if one day politics changes and they update that home assessment to be taxed at the current value of $460k that a tax bill going from $6k to potentially north of $18,000 wouldn’t sting or matter much to that owner?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Delaware also does not adjust

Which seems nuts, because of one day progressives take over and complain about equity, they could decide to reassess everything so that the tax base for property taxes would be modernized to make sure 'people pay their fair share'. It seems like a massive risk to move to states or areas where they don't constantly update their assessments. Assuming assessments will never go up is a gigantic gamble. One day you could wake up to a tax bill that quadruples due to some progressive pols getting aggressive. Your low tax bill is entirely predicated on politics never changing.

This is only an issue for people buying expensive homes, or who are lucky enough to buy a home that massively appreciates. Most people own homes worth way less so even if their tax bill triples or quadruples, their current taxes are so low that it would not even matter that much.

Also higher taxes are tied directly to city services. If your tax bill is going up to pay for the fantastic schools or great parks and amenities, well-- how else can they pay for those.

I am not going to sit around worrying about the possibility that my 500k house in a great area with wonderful schools might double in value and then "of no!" I'll gain a half million in equity in a place where it will be easy to sell because it's appealing to live there, and have to pay a tax my fraction of that equity in property taxes.

Not true at all.

$6k tax bill on this $460k home:

https://www.zillow.com/homedetails/1406-Greywall-Ln-Wynnewood-PA-19096/9956995_zpid/


That’s only because the home is assessed at $153k. Are you really going to say with a straight face that if one day politics changes and they update that home assessment to be taxed at the current value of $460k that a tax bill going from $6k to potentially north of $18,000 wouldn’t sting or matter much to that owner?

It seems like this would be research a serious buyer would do. If you don’t know how taxes work in a given jurisdiction you shouldn’t be buying a house there.