Ask the AVI expert: Should low assessments be reported?

Posted: March 08, 2013

Q: I'm a property owner in a redeveloping neighborhood. I bought my house for $100,000 in 2009. Its assessed value for taxes was $25,000 then. I just got my new assessment, and it's $70,000 - still obviously too low. Is there any benefit to reporting it as too low? I don't believe there is, since it being low will keep my taxes low. But is there any potential downside to having my house assessed too low by the city?

A: The short answer is "no." There should be no downside to sticking with your low assessment. Even though the new assessments are supposed to reflect market values, they are still mass assessments. They reflect broad averages of groups of comparable properties. Your assessment shouldn't harm your ability to sell your house at full market price, or to get an accurate appraisal from a bank.

And it's possible (though admittedly unlikely) that you overpaid for your house and that your new assessment is closer to the mark than you think. (If your house has a 10-year tax abatement, then your city assessment will be lower than the sale price. But that's another story.) It's also possible that in the coming years, the city will act on its own to reassess your property higher. The head of the Office of Property Assessment estimates it will take three years to iron out all the kinks in the new assessments.

While you are under no legal or ethical obligation to report what you think is a low value, there's one other factor to consider: the impact your low assessment has on your neighbors' tax bills. Every low appraisal reduces the overall value of the city's real estate by a little bit. The lower the overall appraised value of real estate, the higher the city has to set the property-tax rate, in order to raise enough money.

- Matt Ruben


Have a question about your property tax assessment? Send it to avi@phillynews.com. Include your name and phone number, though we won't publish it.

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