ACT 42 ENHANCED RESIDENTIAL PROPERTY TAX ABATEMENT
Part 1 of this 3-part blog, located here, discussed the Act 42 and Act 202 residential property tax abatement programs available through Allegheny County, the City of Pittsburgh and Pittsburgh School District. In addition to, or in lieu of, the abatements discussed in Part 1, new and improved residential property located in the City of Pittsburgh may be eligible for alternative abatements for City and School District purposes, which allow for reduced real estate taxes for up to ten years following completion of the improvements. This program is known as the Act 42 Enhanced Residential Tax Abatement, and is available only for property located within certain neighborhoods defined by the Council of the City of Pittsburgh, as discussed below.
The City of Pittsburgh and Pittsburgh School District Act 42 Enhanced Residential programs allow for an exemption of up to $250,000 of the increased assessment attributable to construction of, and/or improvements to, residential real estate located within a defined Uptown District, Downtown District or Targeted Growth Zone for City and School District tax purposes only. This program is not available for County tax purposes, and is available in lieu of, not in addition to, the Act 42 Residential programs of the City and School District discussed in Part 1 of this blog. Thus, for improvements and/or new construction of real estate located within an eligible neighborhood, the property owner should apply for the Act 202 or Act 42 Residential Abatement for County purposes and the Act 42 Enhanced Residential Abatement for City and School District purposes. Properties outside of the eligible neighborhoods will only be eligible for the Act 42 Residential Abatements for County, City and School District purposes.
The following neighborhood areas within the City of Pittsburgh are considered Targeted Growth Zones for purposes of the Act 42 Enhanced Residential Abatement: Allentown, Arlington, Beltzhoover, California-Kirkbride, East Allegheny, Elliott, Esplen, Fineview, Hays, Hazelwood, Homewood North, Homewood South, Homewood West, Knoxville, Larimer, Lincoln-Lemington-Belmar, Lower Lawrenceville, Manchester, Marshall-Shadeland, Mount Oliver, Perry South, Sheraden, Spring Garden, Upper Hill, Upper Lawrenceville and West End. The boundaries for each Targeted Growth Zone are described in more detail in Section 265 of the Pittsburgh Code. In addition, residential property located in the Uptown District and Downtown District, each as further described in Section 265 of the Code, are also eligible for the Act 42 Enhanced Residential Exemption.
As with the Act 42 Residential Abatements, application for the Act 42 Enhanced Residential Abatement(s) must be filed with the appropriate City and School District agency/office within 180 days of receipt of the initial building permit for making the improvements. The value of the improvements will be determined by a professional real estate assessor acting on behalf of the City and/or School District upon completion of construction. Subject to the final determination by the taxing authorities, taxes on the subject property may be reduced by 100% of the value of the improvements, up to $250,000, for each year in which the abatement remains in place. In addition, the property may be freely transferred, and any person who purchases property for which an application for abatement was made, or for which the abatement was approved, will have the rights and benefits of the application or approved abatement.
By combining the Act 42 Enhanced Residential Abatements of the City and School District with Allegheny County’s Act 202 or Act 42 Residential Abatement, property owners constructing or improving residential real estate can realize even greater savings in real estate taxes for significantly longer periods of time. Thus, it is important that property owners considering building or renovating residential property understand which programs they are eligible for, know the procedures for applying for and obtaining the abatements at the appropriate times, and, where appropriate, seek the assistance of counsel to ensure maximum real estate tax relief.
Come back next week for the final part of this 3-part blog, Part 3 –Residential Enhanced LERTA, which will discuss additional real estate tax savings that may be available for condominium owners in downtown Pittsburgh.