Falling Real Estate Values Offer Opportunity for Property Tax Savings

April 15, 2009

One advantage of falling real estate values may be the opportunity for property owners to obtain a lower assessment which results in lower property taxes. Property assessments are based on fair market value. When a factor known as the common level ratio is applied to the assessment amount, the resulting dollar amount should be the fair market value. 

In Lancaster County, the common level ratio for the period July 1, 2008 to July 1, 2009 is 1.36. Accordingly, an assessment of $100,000 means that the fair market value of the property should be $136,000. If the property has a fair market value of less than the assessment with the common level ratio applied, the property owner may petition the County Assessment Office for a reduction in assessment. Generally, it is necessary to have an appraisal or some documentation in support of the fair market value. 

Last summer my husband and I bought a home for a price that was approximately $20,000 less than the value calculated by applying the common level ratio to the assessed value. We were able to get our appeal in before the August 1, 2008 deadline, and in November, our assessment was reduced by $20,000 based on our purchase price. In the world of property assessment and taxes, this is not earth shattering, but it will save us close to $500 a year in taxes. 

Assessment appeals must be filed on August 1 of the year preceding the tax year on appeal. If the fair market value of your property is significantly less than your assessed value with the common level ratio applied, and you can establish your fair market value in some way, it may be worthwhile to file an appeal with the Assessment Office. We would be happy to help you with that process, and you should contact our real estate paralegal, Sharon Friesen, or me.