Feb 21, 2013

Time to Push Back

When the Board of Assessment Pushes Too Far by Reassessing Your Property Based on a Hypothetical Value, It’s Time to Push Back.

May a board of assessment value your property based on a hypothetical value? Moreover, may it reassess a property based merely on the sale of the property? In a recently decided case, a panel of the Commonwealth Court says no.

In Krohn v. Snyder County Board of Assessment Appeals, the tax assessment on a property was increased on the basis that the property had been sold and that a homesite on the property had not been assessed previously. The Krohns are taxpayers who owned two parcels of land. A barn was located on their first parcel and the Krohn’s farm was located on a larger second parcel of land. The Krohns sold the larger parcel to their son, but they retained title to the smaller parcel that contained the barn (the “Barn Property”).

The Board of Assessment reassessed the Barn Property on the basis that the adjoining parcel had been sold by the Krohns. Further, the Board attributed a homesite value to the Barn Property and argued that the highest and best use would be to build a home on the site.

The Court noted that while a hypothetical highest and best use can make a property attractive to a buyer, it may not be used as a reason to increase the tax assessment. The law requires that real estate taxes be based on the actual value of the property. In the Krohn case, by applying a hypothetical homesite value to the Barn Property, the Board violated the Uniformity Clause in the Pennsylvania Constitution.

In reversing the lower court, the Honorable James Gardner Colins pointed out that the Uniformity Clause calls for uniform rates of taxation on similarly situated properties. He continued, “[T]he fact that the Board has chosen to arbitrarily increase the value of property by declaring homesites where no homes exist . . . is simply a fictitious method of increasing the taxable value of the property by assigning it an unsupported hypothetical value.”

Property owners should be aware that the law allows the reassessment of a property in only specifically enumerated circumstances. The sale of a property is not a valid basis for a reassessment by a county.

In the event you receive a reassessment notice in a year where there is no countywide reassessment taking place, you may wish to have the notice reviewed by an attorney who will assist you in determining whether your property is being reassessed in accordance with the law.

If you have questions about how these assessments may affect you, please contact a member of the Tax Assessment Appeals practice at Eastburn and Gray.

Author: Mark S. Cappuccio

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