City to accept homestead exemption applications; program approval pending
City homeowners can begin applying for a homestead exemption on their property taxes, despite the fact that neither City Council nor the state legislature has yet approved bills establishing an exemption in Philadelphia.
Mayor Michael Nutter announced Friday that the city would begin accepting applications in anticipation of approval by both legislative bodies.
“There are no income requirements, no age limitations,” the mayor said. “You just need to own and live in your home. There really is no reason why every homeowner in the city shouldn’t sign up.”
Homeowners have until July 31 to complete an application and return it to the city.
“You need to sign up now,” Nutter said. “After that time, unfortunately, for this year it will be too late to enroll.”
A homestead exemption — if ultimately approved — would be available for taxpayers’ primary residences only. Rental properties and second homes are not eligible. Mixed use properties will be eligible for a break in proportion to the home versus business square footage.
The amount of any exemption is simply subtracted from the assessed value of a property, lowering the tax bill. As an example, the mayor cited a property valued at $100,000. With a $15,000 exemption, like the one proposed by the administration in its current budget plan, the assessed value would drop to $85,000.
“That will be reflected in the assessment notice that you will receive in the fall,” he said.
The mayor was unable to say exactly how much the exemption would reduce the tax bill for the example property. That will hinge on the final AVI numbers, he said.
In addition to the announcement, Nutter said the city will be mailing applications to an estimated 500,000 homeowners, who can also apply online.
“We encourage all homeowners to apply,” he said.
Questioned as to why he chose to make his announcement before the state and council have approved any exemptions, the mayor said it was a matter of state law, which requires tax bills that include a change of assessment to go out at least 10 days prior to Oct. 1.
Assessments for all properties in Philadelphia could change this year, depending on action by City Council, which is in the midst of debating a move to implement the mayor’s Actual Value Initiative — changing the basis of property taxes from assessments based on a fraction of value to one based on market value.
Council, as part of a larger debate of AVI, is looking at several homestead exemption options – ranging from $15,000 to $60,000.
Nutter’s administration proposed a $15,000 homestead exemption as part of the mayor’s budget package. Council members, worried that a shift to AVI would sharply increase property taxes for people unable to afford it, have suggested larger exemptions.
AVI has turned out to be very contentious issue.
Council is splintered on the idea, but must pass a budget this month. Budget hearings continue next week, when Council leaders expect some sort of consensus to emerge. Its final implementation hinges on approval by the state legislature of several companion bills. Like Council, the city’s delegation in Harrisburg is divided over AVI.
The mayor said Friday that he while he “never predicts,” he was confident some sort of exemption would clear both the state legislature and Council.
“I’m hopeful that won’t get political,” he said. “There is a fairly decent consensus around the idea.”
Philadelphia is the only county in the state without a homestead exemption. Homeowners can apply for the exemption online at www.phila.gov.