How Will COVID-19 Affect Property Tax Assessments?

By James M. Berent, Esq.
Bernstein-Burkley

Kit F. Pettit, Esq.
Bernstein-Burkley

With nearly everything being impacted by COVID-19, it’s not a surprise that real estate taxes are also going to be affected. Occupancy changes, consumer adjustments, loss of rental income and general profit loss are already disrupting real estate businesses and landlords, and even with stay-at-home orders lifted, many companies will not survive.

The Income Approach

One of the many financial consequences of COVID-19 is the reduction in property values, and these significant reductions in value may result in property owners paying excessive real estate taxes. The market value of commercial real estate is often determined based on the income approach, so any reduction in income due to COVID-19 will spell the same for the value of property for tax assessment purposes.

As the most frequently used method for valuing commercial properties, the income approach evaluates property as an investment, incorporating elements like income, expenses, investment risk, and property stabilization.

Since the majority of states and counties determine annual property assessments based on the value as of January 1st, the reduction in income for 2020 will impact the market value of the property for tax year 2021.

Pennsylvania Property Tax Assessments

Based on this analysis, Pennsylvania property owners may want to consider seeking 2021 property tax assessment reductions.

Pennsylvania property owners in many counties can already start filing their 2021 property tax appeals. In every county except Allegheny, those appeals will need to be filed by August 1, 2020 or September 1, 2020. Allegheny County property owners will file their 2021 tax assessment appeals between January 1, 2021 and March 31, 2021. While property owners haven’t yet experienced the effects COVID-19 will have on them in 2021, they can still file and secure an appeal to next year’s tax assessment and start considering whether their property might receive a lower assessment value.

What to Do with Your Property Tax Assessment?

It’s important to be proactive about 2021. Business revenue downturn due to COVID-19 should be applied to next year’s assessment, as it would be appropriate to seek an assessment reduction. It’s never too early to start thinking about next year, as the effects of COVID-19 will still surely be felt everywhere.

Bernstein-Burkley

Bernstein-Burkley is ready to field any questions you might have about property tax assessment and how the current climate affects it. If you feel like you might have a circumstance that could impact your property tax assessment, reach out to our legal team at info@bernsteinlaw.com or call (412) 456-8100.

Written by Bernstein- Burkley, P.C. on May 20, 2020

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