3 Ways Property Owners Can Help to Defend School District Tax Appeals

This article will help property owners understand the most important ways to help defend property tax appeals filed by School Districts in Allegheny County, Pennsylvania.

Step 1: Help Establish Reasons You Overpaid - Show an Inflated Sales Price When Possible.

The best way property owners can help defend property tax appeals filed by taxing entities is to help prove that the recorded sales price is inflated. COVID-19 and rising property market values have inflated recent sales prices. To successfully defend tax appeals, it is important to prove that the actual sales price is higher than what the market value should be. Comparable sales with prices lower than the subject certainly can help (and we will help find them), but there are also multiple ways property owners can help establish an inflated sales price.

1. Did the Sales Price include Seller Assistance? "Seller assist" is one way property owners can show an inflated price. Seller assist is a feature offered by some mortgage companies that allows sellers to pay for some or all of the buyer's closing costs. The amount should be deducted from the sales price when evaluating the sale price for tax appeal purposes. The Seller assist can be found on the closing statement (HUD-1), and will be separately itemized. Along with Seller assist, the closing statement should be examined to see if Buyer paid any transfer taxes or other costs for the Buyer as well. Be sure to include a copy of closing documents to identify if the Seller assist or other line items exist that can help.
2. Did the Sales Price include fixtures, furniture, and/or other personal items? Property owners defending tax appeals should identify if the purchase price included any additional fixtures, assets or other items that can also be reduced from the sales price. These items can include furniture, window dressings, appliances, machinery or other inventory or assets on the property that are part of the sale. Once identified, these assets should be reduced from the sales price to help lower the property taxes. Ideally, the additional items should be identified in the sales agreement, but that is not always required in order to receive a property tax reduction.
3. Can You Identify Personal Reasons You Overpaid? Low inventory and high demand is causing an inflated housing market in Allegheny County, PA. As part of the tax appeal process, property owners should identify personal reasons why they believe they overpaid. These reasons often include employment changes, family issues, or other personal reasons as to why the buyer was willing to pay more than the fair market value of the property. A sale price alone is not always indicative of fair market value and it is important for property owners to identify the personal reasons why they paid an inflated sales price. This can be supplemented in a property owner affidavit or statement.

Step 2: Identify Problems and Get Estimates of Repair for Both Disclosed and Undisclosed Items.

Most homebuyers are not aware of every issue or repair necessary for the property that they just purchased. Often there are undisclosed issues that were not properly revealed by the Sellers and were not identified in any pre-closing inspection reports. Property owners should document and photograph any and all undisclosed issues as part of the tax appeal process. It is often helpful to obtain estimates of any deficiencies that would need to be disclosed if you were to list the property for sale. Getting an estimate does not mean you will need to get the repair done. In fact, the defects that work best are ones that were unknown to the buyer prior to closing and that have not yet been repaired.

Discovering new defects is not uncommon. This could be any number of things, from water damage in the basement, structural issues, foundation issues, to poor drainage in the yard. To demonstrate these issues, pictures can be extremely helpful evidence at a hearing. They can help even more when accompanied with estimates or invoices showing the cost and/or necessity to repair.

In addition, property owners are considered experts on their property and should disclose those unique circumstances which may affect market value. If there are unique circumstances about your home, property or neighborhood that harm market value, these need to be presented and shared with your lawyers. These may include:

• Is the property next to a busy road or highway?
• Are there noise issues from a nearby ambulance, EMS or Fire Department?
• Is the house haunted or was there a past crime at the property? (Sounds crazy but it happens).
• Are there pictures of the property or house that could help show material issues that could affect the sale? Pictures showing deficiencies can help lower property values. Of course, they have to be the right pictures.
  

Whatever it may be that is unique and potentially harmful to market value should be shared with your lawyers.

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Step 3: Be Careful About Offering Evidence that Hurts Your Case.

The biggest mistake property owners make in defending school district cases is volunteering information that could help raise your property taxes. Most tax appeal hearings in Allegheny County, PA consist of a two step appeal process. First, there is first level Board of Property Assessment Appeal and Review (BPAAR) hearing, and then a vast majority of these first level cases are appealed to the second level, Board of Viewers (BOV) hearing. It is important NOT to disclose the wrong information at the first level BPAAR hearing, or it may be used later at the BOV hearing to raise your property taxes.

Property Owners Should NOT Volunteer The Following:

• Do NOT volunteer Bank appraisals supporting the sales.
• Do NOT share improvements or updates to the property.
• Do NOT share refinancing information after the sale of the property.
• Do NOT share that there was a "bidding war" since that may help establish 'fair market value'.
• Do NOT share the listing price if it is not helpful.

Conclusion:

There are several ways property owners can help their lawyers defend school district tax appeals. These include identifying reasons you overpaid for the property, including reviewing the closing statement; identifying undisclosed issues which were discovered after closing; as well as making sure NOT to disclose information which is not helpful. For any information about this article, or for questions about defending school district tax appeals in Allegheny County, PA, please feel free to reach out to attorneys Noah Fardo or Nicole Amick by calling 412.802.6666 or emailing us at info@pghfirm.com.

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