When homeowners think their property is over assessed, they can appeal through Allegheny County—and thousands of residents appeal their assessed valuations every year. But who addresses properties that are under assessed—houses that create inequity across the system and pit neighbor against neighbor because one is taxed at fair market value and the other is paying thousands less in taxes on a similar property?
To try to make the system more equitable and uniform for everyone, Mt. Lebanon has regularly appealed the assessments on some residential properties. (The school district, which handles commercial appeals, also benefits from fairly assessed residential properties).
In several recent years, the municipality appealed recently sold properties rather than those purchased many years ago because there was provable data in the form of current sales prices to help make the argument that the assessments were too low. But some residents said that method unfairly burdened new homeowners. In response, the Mt. Lebanon Commission decided to look at all residential properties and identify those that were most egregiously under assessed. This year, Mt. Lebanon is appealing 26 properties with sales dating back to 1989. Only five of those properties sold in 2014. The total estimated difference between assessed value and market value of these properties is $5.2 million.
“The commissioners approved the method with the goal of gaining a balance of equity within our residential properties by using all properties regardless of year of sale,” says Finance Director Andrew McCreery. “The new policy should be repeatable, if the commission decides to continue the program.”
Even though the difference between the property value and assessed value is a multi-million dollar figure, the municipality does not stand to get a windfall of additional revenue. Even if it won every appeal, Mt. Lebanon would collect only about $23,000 more in taxes.
“We’re not balancing the budget with this money,” McCreery says.
Here’s how the properties were chosen:
- All residential property data was reviewed. Properties with a sale price of more than $200,000 were examined (2,693 properties).
- A standard inflation factor was applied based on the Federal Housing Finance Agency Housing Price Index (HPI) to bring all sales prices up to third quarter 2014 value. For properties with an assessed value/HPI adjusted sales price below 50 percent (41 properties), the municipality looked at comparable properties.
- Any property with a difference of more than $100,000 between the 2014 sale price and the assessments of the comparable properties was selected for appeal. The greatest discrepancy in assessment vs. comparable value in a single property was $356,600; the lowest discrepancy was $112,133.
At the first level, Mt. Lebanon will pay $175 per appeal, which is extremely cost-effective, McCreery says.
For frequently asked questions and more details on the program and how Mt. Lebanon handled previous years’ appeals, go to www.mtlebanon.org [1].