Reed Smith Client Alerts

In the past few years, taxing jurisdictions filed tax assessment appeals based on the increased prices of sales of real estate in Allegheny county. Dubbed the “newcomer tax,” school districts seek out recently acquired properties and appeal the properties’ assessed values to the Allegheny County Board of Property Assessments and Appeals Review (“BPAAR”). The districts argue that the recent sales price justifies an increase in the property’s fair market value and consequently the real estate taxes. If BPAAR agrees, it is required by law to apply the common level ratio in effect for the tax year to determine the assessment.

Authors: Dusty Elias Kirk Matthew J. Morella

In 2021, a group of taxpayers filed a lawsuit in the Allegheny County Court of Common Pleas challenging the accuracy of the common level ratio used in 2022 appeals. In the lawsuit, the taxpayers argue that the current ratio of 81.1 should be lowered to 63.53. The application of an 81.1 ratio compared to a 63.53 ratio dramatically affects a taxpayer’s assessment. For example, if a property has a current fair market value of $100,000, and it is purchased for $150,000, an 81.1 ratio would result in a $121,650 assessment. If, however, a 63.53 ratio was applied, the assessment would be $95,295. Clearly, then, a reduced ratio is advantageous to taxpayers.