Secrets to Winning Your 2018 Property Tax Appeal
Hints & Tips For Property Owners
Once again, tens of thousands of property assessment tax appeals are being filed in Allegheny County, PA for 2018. We anticipate that most of the 2018 tax appeals will be filed by the taxing entities (i.e. school districts or the municipality) challenging the current property assessments based on a recent sale price. However, many commercial and residential property owners should consider challenging their assessment value based upon a dated base year system and changes in the marketplace.
This page should help property owners who filed their own appeals increase their chances for a reduction, and also provide guidance for property owners who have had their property assessments appealed by the school districts or other taxing entity.
I. The Tax Appeal Process
Step 1 is always understanding the tax appeal process. To significantly increase chances in an Allegheny County assessment appeal, property owners must have some basic understanding of the two step tax appeal process.
- First, there is a BPAAR (Board of Property Assessments Appeals and Review) hearing administered by a hearing officer, who has professional real estate experience (i.e. appraisers, agents, etc.). The BPAAR hearing is typically held at the Allegheny County Office of Property Assessments, located on the 3rd Floor of the County Office Building. At the first level BPAAR hearing, evidence is offered by both sides, and the hearing officer then makes a written recommendation to the actual Board of Property Assessment. The Board of Property Assessment typically takes about 60-90 days to render a decision, called a “Notice of Disposition”. Once the decision, or “Notice of Disposition” is sent, all interested parties then have 30 additional days from the mailing date to appeal this BPAAR decision to a second level BOV (Board of Viewer) hearing. This is a ‘de novo’ appeal, meaning fresh or new.
- Second, there is the BOV (Board of Viewers) hearing. This is a more formal hearing in the Court of Common Pleas of Allegheny County. The BOV has a civil docket number and is held on the 8th floor of the City County Building in front of an assigned Hearing Master. It is very important for property owners to understand that because these are de novo proceedings, no party is limited to the evidence they presented at the first level. In fact, school districts often have different and higher opinions of value at these second level proceedings. Property owners therefore need to be prepared to discuss information that they may be seeing at the first time at the actual hearing. If the parties are unable to resolve the tax appeal through negotiations, the matter is scheduled for an actual trial, where all applicable Allegheny County local rules of court apply. Once the BOV court renders a decision, all parties may appeal to the discretion of the presiding Judge, whose review is limited to the evidence and transcripts from the BOV hearing, and legal briefs are submitted by the parties.
- Third, and finally, if the parties are still not satisfied, an appeal to the Commonwealth Court of Pennsylvania can be filed alleging that the lower court abused its discretion or made an error of law. Very few cases are appealed this far. Theoretically, the case could also be appealed to the Pennsylvania Supreme Court.
II. The Evidence
- In order to change a property assessment in Allegheny County, the filing party has the burden of proof. Specifically, to prove market value of the subject property. This is most often accomplished through comparable sales, but other valuation methods may also be used (i.e. cost approach, income approach).
- Recent sale prices are persuasive, but NOT conclusive, meaning a sales price is NOT controlling in an assessment appeal, and the evidence must include comparable sales. If you have been appealed, and the school attorney only presents a deed or county web page, the school district should lose because they did not present comparable sales to support their appeal. Similarly, if you recently purchased a property, introducing only evidence that relates to the purchase is not likely to lead to any reductions.
- The primary issue for 2018 current appeals (property owner or taxing entity) is the fair market value of the property, either in the current year (and then applying a ratio) or as of the base year January 1, 2012.
- The Appellant (appealing party) can use either a base year valuation method or a current fair market value method in their argument. The base year valuation method focuses on what the property was worth in 2012 by looking at sales information around that time. The current fair market value method focuses instead on more recent sales, and requires that this opinion be depreciated backwards to reflect a 2012 value.
- The best evidence is to provide proof of similar properties, similarly located, which have recently sold for a value that supports a lower assessed value for your property. In regards to school district filed appeals, additional useful information property owners can include relates to the following: any reason you think you overpaid for a property, any other items that were included in the listed purchase price (seller assist, furniture, etc.) and/or any significant issues with the property that you were NOT aware of at the time of closing.
- You should have a minimum of 3 comparable sales, but if you can find more it can be very persuasive to submit them, if they help.
- You should print out all of the county webpages for any comparable sales you intend to offer. (County comparables can be found on the Court-Ordered Allegheny Real Estate Website). Be certain to at least print the home page, building information page, and image for any comparable sales offered as evidence.
- You are required by local rules to have at least 3 copies of any evidence you intend to offer, or in theory the evidence can be denied.
- Appraisals can help, but are not always necessary, and in some cases are discouraged.
- Pennsylvania law requires that one of three recognized valuation methods be used in order to change a property assessment. They are a) the comparable sales approach; b) the income approach; and/or c) the cost approach.
- If you are defending a taxing entity or school district appeal, remember that a sales price alone can be persuasive evidence, but it does not meet the burden of proof without a valuation method being considered. Read more about defending school district appeals.
III. Hints, Tips & Secrets
- The risk of increase is typically low in your own appeal. Any time a property tax appeal is filed, the assessment could be sustained, decreased or increased. The reality is that it is very seldom that an owner files an appeal and is raised. Theoretically it can happen, but in practice seldom does. Likewise, if a school district files the appeal, the assessment is seldom lowered. The threat of having an assessment increased in an owner appeal can happen, but is rare.
- Understand the difference between the BPAR and the BOV. Property owners may freely withdraw appeals filed at the BPAAR before a hearing (the first level hearings), but are NOT allowed to withdraw BOV appeals (second level appeals) without the taxing entities consent. This is an important consideration before deciding to appeal any first level decision. The best outcomes typically use the entire appeals process to gain property tax reductions. Saving property taxes through attrition, so to speak. Inotherwors
- Use your neighbor cases to strengthen your own case. Research settlements of your neighbors cases before any settlement at your BOV case. Conduct a percentage analysis of both your neighbors settlements as well as your neighbors assessment compared to their purchase price. This information can be found on the Allegheny County civil docket access. School attorneys may become very defensive if you raise evidence as to how they settled other cases, but in our opinion, should be relevant. If two homes sold on the same street at the same time, they should settle for close to the same percentage. In addition, they should be assessed comparatively as well. The problem in Allegheny County is that there are still gross discrepancies between assessments and percentages new homeowners are taxed at. Though this should by no means by the ONLY evidence you bring to an assessment appeal proceeding, snowing the assessments of those properties around the subject property can sometimes help in decreasing property assessments.
- Out-research the Taxing Entities. The school districts have thousands of appeals and can get sloppy in their research. Make sure you know the entire market of the property you are appealing better than the attorneys opposing you. This means knowing the evidence that both helps and hurts your case. As stated above, this means also having comparable sales both from 2012 and from the current base year. Distance and neighborhood code are typically the most important factor (of course not always), but the closer your comparable sales are, typically the better. We often recommend bringing a map as evidence and calculating the distance, especially at the Board of Viewers.
- Use the internet. Comparable sales can be found online at the Allegheny County website, zillow.com, realtor.com or by contacting local real estate agents or appraisers and asking for a comparable sales analysis.
- Be nice, it can save you thousands of dollars of property taxes. Seems obvious, but hearing officers are tired of frustrated property owners or perhaps expect many people to be angry. Typically, preparation and kindness will work better than anger towards the individuals involved. Likewise, there is no benefit of being hostile with the attorneys from the taxing entities as the case will most likely be appealed to the second level and these are the same attorneys you will probably be negotiating with in the future.
- Don’t hire non-lawyers because they are not allowed at the BOV. If you hire legal representation, make sure the representative is a lawyer and that the legal fee covers the entire length of the representation, regardless of appeals to the BPAAR or BOV. The appeals process is often necessary to obtain the largest reductions and only licensed attorneys are allowed to offer representation at the BOV.
- Understand your fee. Many cases are appealed to the BOV. If you are paying an attorney on a contingency fee, make sure you understand if the fee includes future years. Many attorneys will charge contingency fees for 3 years regardless if the appeal is resolved in the first year. Our fee ONLY includes the years under appeal. If the appeal ends in year 1, our contingency is calculated off of the first year only. Likewise, if the appeal lasts two years (as many cases do) then our fee is for the first and second year only. Just make sure you understand the contingency fee arrangements.
- Simple, professional and persistent leads to the best results. Efficient, organized presentations are appreciated by the hearing officers and may tend to lead to better results. Be smart about proving market value both in 2012 and/or 2018. Use colored graphics and maps, and focus on data. It is important to have photos and estimates as necessary, and use the entire appeals process.