Key factor is how far your reassessment is above – or below – the average in your municipality or school district
March 12, 2017
Thousands of Lancaster County property owners opened preliminary reassessment notices recently and learned their property’s value, for tax purposes, has gone up.
After looking at the numbers, many wondered: Will my tax bill, likewise, go up? And by how much?
The answers aren’t yet clear. But there is a way to get a general hint at whether your tax bill might go up or down.
- If your assessment increased by a significantly greater percentage than the average in your taxing jurisdiction, then your tax bill is more likely to go up. The bigger that gap, the greater the likelihood of an increase and the bigger that increase could be.
- Conversely, if your assessment increase was a significantly lower percentage than the average, then there’s a chance your taxes could go down. The bigger the gap, the more likely you’ll see a tax decrease.
John Mavrides, director of the county’s assessment office, said the main thing property owners should focus on at this point is whether their preliminary assessment seems like a fair measure of market value. And if not, they should gather evidence for an appeal.
A sizable assessment increase doesn’t necessarily mean that the property is overvalued.
In a countywide reassessment, some owners’ tax bills will go up and some will go down. Overall revenue must stay neutral.
Key factors missing
It’s too soon to generate specific estimates of tax increases or decreases, and the use of averages only provides a clue. A more accurate indicator, according to Mavrides, will be how much a community’s total taxable assessed value increases.
And those totals won’t be determined until assessment appeals have been settled and owners of rural land have had their Clean and Green tax reductions factored in around June 1. Clean and Green assesses land based on its use, rather than its market value.
What we do know
But let’s take a look at what we know so far:
Lancaster County property owners pay three different real estate levies: county taxes, municipal taxes and school taxes. And the calculation is different for each.
Here’s how to get a sense of the possible impact on your tax bill:
First, take your current assessment and subtract it from your new preliminary assessment. Then divide the difference by your current assessment. That will give you your percentage increase.
If your current assessment is $100,000 and your preliminary new assessment is $135,000, for example, then your increase is 35 percent, or about average for Lancaster County.
If your assessment increased by significantly more or less than the county average, then your county tax bill is more likely to go up or down.
And, again, the bigger the spread, the greater the likelihood of a significant increase or decrease in your bill.
The same principle can be used to get a ballpark sense of your municipal situation.
Among the county’s 60 municipalities, the average assessment increases ranged from a low of 23 percent in Clay Township to a high of 50 percent in Fulton Township.
You can see the full list of average increases in the chart accompanying this story.
Again, if the percentage increase of your own assessment is significantly larger or smaller than average for your community, there’s more chance that your municipal tax will be larger or smaller.
The biggest tax bill for local property owners is the school tax, and there the data is even more limited.
Mavrides, the county’s assessment chief, said his office did not calculate the average preliminary assessment increase by school district, the way it did by municipality.
In a couple of cases — Manheim Township and Columbia Borough — where the school district covers only one municipality, property owners can use the municipal calculation above to get a sense of whether their school tax is also likely to go up or down.
But the rest of the county’s districts are made up of two or more municipalities, and the average increases are less clear.
As mentioned above, the total assessment values for each community won’t be known until later in the year, after Clean and Green adjustments have been made and reassessment appeals have been settled.
At that point, the county — and each municipality and school district — will have to adjust its millage downward, so that its total tax collection is revenue neutral.
At that point, individual property owners will be able to multiply their new assessment by the new millage rate to determine if their county, municipal and school tax bills are going up or down.
While a community’s total tax take is supposed to be the same before and after a reassessment, there’s no limit on how much an individual taxpayer’s bill might go up or down.
And there’s another consideration that could affect your future tax bill.
Taxes can also be raised in a reassessment year, just as in any other year. But the size of the increase is limited. Under state law, county and municipal tax rates can be raised no more than 10 percent in the year that a reassessment takes effect. School tax increases are capped by Act 1 at much smaller increases and vary from district to district.
So even if a specific property comes out revenue neutral in the reassessment, there’s still a chance that taxes on the property could go up.
As a result, the farther your assessment increase is below your community’s average increase, the greater your buffer against a higher tax bill.