THAT’S NOT FAIR!

I hope that you are as excited as I am. I don’t believe I have ever been happier. In just a few days, some total stranger is going to place a piece of paper in my mailbox that declares that my house is worth twice as much as it used to be worth. This is called reassessment, and is it ever a great time to be a property owner in Allegheny County.

But not everyone is going to be as happy as I am. Many people in the city and the suburbs are going to be really upset that their homes are now valued at much higher values than before, even though that value might still be below their purchase price. In fact, the first time I handled a property assessment appeal in Allegheny County, the judge asked my client the magic question: “Would you sell your house for that new assessment figure?” Of course my client, being under oath and all, said, “Absolutely not! It is worth much more than that.” And with that simple ask-and-answer, the case was closed and I had learned another valuable lesson: whenever possible, never let a client speak.

But I digress. Years ago when the judge ordered all of the properties in our county to be reassessed, he ignited a political firestorm that continues to blaze out of control today. Politicians seem to believe that the value of the property actually means something when it comes to setting real estate taxes. And they also believe that we voters believe they are concerned for us. But are they?

Let’s examine the facts. If the total of the real estate taxes on my home is $3,000 per year, and if my home is assessed at $100,000, I am being taxed at 3 percent. If there are 1,000 homes in my county, township and school district, and if we are all taxed the same, then our total real estate tax revenue adds up to $3 million. From this total revenue, my county, my township and my school district take out what they need in order to run their operations.

Then along comes a reassessment. The assessor revalues all 1,000 of our homes at $150,000. The budget for running the county, township and school district is still $3 million, so they have to lower the tax rate (called millage) to avoid receiving a windfall. Now for the tax on my home to stay at $3,000 per year, they will have to lower my tax rate to 2 percent.

Therefore, because I am going to pay the same amount of taxes every year, the value of my home does not really matter, as long as two things happen: one, the homes are all valued the same and two, the taxing bodies stay within budget so they don’t have to raise the tax rate. But you are a smart cookie and you know that neither of those two things is correct. Your neighbor’s house is assessed lower than yours, even though he has a finished basement and a deck and you don’t. That is not fair! And the school board caved in to the unions last year, resulting in a $1 per hour raise, so they had to raise the school taxes this year. That is not fair, either!

When you get your assessment, look at it carefully and ask yourself several questions. First and foremost, is the value of your house near the assessed value? If it is, then you might have difficulty proving that you are being treated unfairly. Second, how does your home’s assessed value compare to other homes in your neighborhood? If it is really high for no valid reason, that might give you a good reason to consider filing an appeal. Of course, if yours is really low, your conscience should guide you as to whether you want your assessment brought up to the level of others in your neighborhood so that you can pay your fair share of the tax load. Right?

Third, and perhaps most important, is how much of a reduction you can reasonably expect to achieve through an appeal. Let’s go back to the $150,000 house that I used as an example. If you get that reduced to $140,000, and if the tax rate is still 2 percent, you will achieve a savings of $200 per year. Now, consider how much your appeal will cost you. If you do it yourself, your half day in Pittsburgh where they conduct the hearing will be well worth your time.

But if you hire an appraiser to back you up, for $350 to $500, and if you hire an attorney to represent you for another $500 to $750, your reduction of $200 per year will result in a loss. So keep your eye on the prize and understand that in order to make your appeal worthwhile, you have to achieve a result that more than pays for the cost and expense of pursuing it.

Christopher M. Abernethy has been practicing law in Hampton Township since 1976. He focuses on elder law, which includes wills, trusts, powers of attorney, living wills and probate matters. He also is proficient in all aspects of real estate law and business law. He is a member of the National Association of Elder Law Attorneys and the AARP Legal Services Network. He can be reached at 412-486-6624 or by email at cabernethy@aaylaw.com. www.aaylaw.com