You won’t know for sure if your property tax bill is going up next year until Philadelphia’s City Council passes a budget. The drop-dead deadline for that is June 30.
But you can make a reasonable guess once you get your new assessment under the Actual Value Initiative in the mail. And those notices begin going out in mid-February.
First, don’t panic if your assessment went up. That doesn’t automatically mean your taxes are going up, even though that was often true in the past. Your taxes are calculated by multiplying your assessment, which is pegged to the value of your property, by the citywide tax rate.
Because the total value of all properties has increased under the reassessment, the property tax rate is actually expected to be significantly lower next year than it is now. This does not mean, however, that all individual taxpayers’ bills will stay the same. Some will go up and some will go down.
Your letter from the city should tell you the “market value” of your property. You can also look up this number on the city’s AVI calculator. It should be much closer to the actual market value of your home than your previous assessment was.
Multiply that new number by .0125. That’s what you’ll owe if the tax rate is 1.25 percent and there aren’t any tax relief measures.
Where did we get 1.25 percent? City officials estimate this would be the new rate that would make the overhaul “revenue-neutral,” meaning that the city wouldn’t pick up extra dollars through the reassessment. Philadelphia Mayor Michael Nutter is currently proposing a revenue-neutral package.
But what if the city implements its homestead exemption, which would give homeowners a little break on their taxes compared to commercial real estate? If the city maintains the $30,000 homestead exemption now the books, city officials estimate that the rate would be about 1.35 to 1.4 percent.
Under that scenario, here’s what you do. If you’re a homeowner, subtract $30,000 from your new assessment. Then multiply that number by .014. If you own a commercial or industrial property, simply multiply your assessment by .014.
OK, yes, it’s complicated. Let’s do an example. If your house is worth $150,000, that means your annual city property tax bill would be $1,875, based on a 1.25 percent rate and no tax relief. But say that the tax rate is 1.4 percent and you qualify for the $30,000 homestead exemption. Then your bill would be $1,680.
You can also enter your address in the AxisPhilly map above to see how your property taxes would change with a 1.34 percent tax rate and $30,000 homestead exemption.
These figures are preliminary. City Council is considering other tax relief measures that could change your bill.