Understanding Property Taxes
Property taxes have climbed on average 27% from 2019 to 2025, due to increased property values resulting from national monetary policy, high inflation, and unchecked over-assessments. States experiencing the largest increases include Colorado, Georgia, and Florida, but rising property taxes can be experienced throughout the United States.
What Do Property Taxes Typically Pay For?
Property taxes fund essential local services including:
- Public schools
- Police and fire departments
- Roads and infrastructure
- Parks and recreation facilities
- Libraries
- Public safety services
- Trash collection
- Emergency responders
- Local government operations
How Are Property Taxes Assessed and Determined?
Property taxes are typically based on the assessed value of your property multiplied by the local tax rate (mill rate). Assessors determine the assessed value through:
- Recent comparable sales
- Similar property characteristics
- Periodic reassessments
- Occasionally mass appraisals
Ways to Lower Your Property Tax Bill
Homestead Exemption
The homestead exemption reduces your property's assessed value if it's your primary residence. The exemption amount varies by state. Some states offer a flat dollar reduction while others provide a percentage reduction.
For example, in Philadelphia the homestead exemption reduces the taxable portion of your property assessment by $100,000 if you own a home and use it as your primary residence. To apply, you can fill out the application online, print it out, and send it by mail to the City of Philadelphia Department of Revenue.
Senior Exemptions
Many states offer additional exemptions for homeowners over 65. These may include tax freezes or tax deferrals. In Philadelphia, the form can be found on phila.gov and can be filled out and sent to the Department of Revenue.
Disabled Homeowner Exemptions
Special exemptions for disabled homeowners are available and are similar to the senior exemptions. Homeowners typically need to provide medical documentation of the disability in most states. Philadelphia does not have an exemption specifically for disabled homeowners.
Veteran Exemptions
Tax exemptions are available for disabled veterans. The exemption is for any honorably discharged veteran who is 100% disabled and has a financial need. To apply in Philadelphia, you need to apply with the PA Department of Military and Veteran Affairs.
Low-Income or Hardship Exemptions
Many jurisdictions offer relief programs for low-income homeowners. If a person's property tax bill exceeds a certain percentage of their income, they can receive a partial or complete tax break.
In Philadelphia, you can apply for a Real Estate Tax Freeze which will stop your bill from increasing if you meet income requirements regardless of age. You must own and live in the property as a primary residence. Under the low-income real estate tax freeze, the amount of property tax you pay each year will not increase even if your property assessment or the tax rate changes. To apply, you need to submit proof of income and proof of residency to the Philadelphia Tax Center.
Property Tax Appeals
The most reliable and simple way to appeal your taxes is to get a real estate appraisal. According to the National Taxpayers Union, somewhere between 30-60% of taxable properties are over-assessed, yet only 5% of taxpayers appeal their assessments.
To appeal your property assessment with an appraisal, a homeowner must file an appeal with the Board of Revision of Taxes.
Using Comparable Sales to Support a Lower Value
This is the preemptive step to deciding if it makes sense to get an appraisal. A homeowner should look up their property characteristics on a municipality real estate website (or Zillow) and find properties that match age, size, style, square footage, and location. If the recent sales sold for less than your assessed value, it makes sense to get an appraisal to appeal your property taxes.
Incorrect Property Records
If your property records show incorrect square footage, number of rooms, lot size, or features that your property doesn't have, it may make sense to get an appraisal. Some municipalities will allow the homeowner to request a reinspection by the assessor's office. In Philadelphia, assessors do not do interior inspections so the way to appeal in this scenario is to hire a real estate appraiser.
Assessment Includes Renovations You Never Made
If your assessment includes improvements, renovations, or additions that you have not made, this is a good opportunity to order an appraisal and point out these discrepancies to the appraiser.
Agricultural or Land-Use Valuations
If you use your land for farming, timber, or wildlife management, you may qualify for tax savings or agricultural valuation, which significantly lowers your residential assessment. To apply, you need to contact your local municipality.
Green or Energy-Efficiency Exemptions
Some municipalities offer tax reductions for solar panels, wind turbines, geothermal systems, or other renewable energy improvements. To apply or to find out if your municipality offers these exceptions, contact your local municipality office.
Property Classification
Ensure your property is correctly classified. Misclassification can result in much higher taxes.
Tax Abatement Programs
Check with your local municipality for any other exemptions. In Philadelphia, there are tax abatements available for new construction and recently renovated properties. The abatements are designed to help revitalize communities, retain residents, attract home and business owners to Philadelphia, and reduce development costs for commercial and residential projects.
The abatements are for 30 months and are available for new residential construction, improvements to existing unoccupied residential properties, and improvements to existing structures that are being converted to residential properties. To apply, you need to fill out an application with the Office of Property Assessment in Philadelphia.
Check for Other Local Exemptions
Yes. Every municipality will have different local exemptions. These might include exemptions for firefighters, teachers, or other specific groups. Check with your city, county, or school district.
Hiring Professional Help
Is It Worth Hiring a Lawyer or Company That Specializes in Appealing Property Taxes?
No. Hiring a lawyer or tax specialist company will be substantially more expensive than simply hiring an appraiser. The easiest way to appeal taxes is to do the necessary research to confirm your assessed value is inflated and then hire a real estate appraiser to produce a report that will prove that your property is being over-assessed.
Additional Advice for Property Tax Appeals
- Broaden Your Search: For property assessment appeals, appraisers are allowed to broaden their search requirements and go back further in time to find the best comparables. This principle is the same for homeowners who are interested in doing their own research and finding comparables for their property. Go back 12-36 months and find the most similar property to your own.
- Be Prepared to Attend Hearings: Understand the appraisal and if you have any questions before your hearing, make sure to ask your appraiser so you can support your assessment. Your presence and testimony can strengthen your appeal.
