Press Release

Pew Study Finds Residential Property Would Account for a Greater Share of Property Tax Burden Under Actual Value Initiative


 As a result of the property tax overhaul known as the Actual Value Initiative (AVI), residential property will account for a greater share of Philadelphia's total property value—and thus the property tax burden—in 2014 than in 2013, according to a new report from The Pew Charitable Trusts.

For the residential sector as a whole, the added tax burden could be as much as $72 million annually, with another $11 million in taxes on the "stores with dwellings," which dominate neighborhood commercial corridors. Meanwhile, the burden shouldered by the commercial and industrial sectors would fall by about $55 million and $20 million, respectively, each year. In all, Philadelphia collects about $1.2 billion per year in local property taxes for the school district and city government.

As explained in the report, AVI: The Shift in the Property Tax Burden, several proposals made by Mayor Michael Nutter and members of City Council, including a homestead exemption for all owner-occupied residences, would lessen the magnitude of the changes, perhaps significantly, but likely not eliminate it.

The shift would occur because residential properties as a group had been comparatively underassessed until now, while commercial and industrial properties were generally overassessed, according to data from the city's Office of Property Assessment. Although AVI remains revenue-neutral overall, this helps explain why the overhaul is on track to produce tax increases for a substantial number of home owners. As part of AVI, all 579,000 parcels in Philadelphia were reassessed.

To a much smaller degree, AVI also would reduce the tax burden on the nearly 15,000 residential properties that have 10-year abatements. Owners of these properties stand to pay about $3 million less in taxes in 2014 than in 2013. The abatements, which are granted for new construction or rehabilitation, reduce but do not eliminate a property owner's tax liability, since they do not apply to the land itself or any part of the structure that is not new.

Read more and access the report PDF.

Media Contact

Cindy Jobbins