Philadelphia approving homestead exemptions without the home
February 27, 2013By Holly Otterbein
"We have 10 months before the homestead affects tax bills. We will be doing eligibility audits on the approved applications going forward."
-- Marisa Waxman, assistant administrator, Office of Property Assessment
Philadelphia Mayor Michael Nutter is offering a tax break to homeowners to soften the blow of the city's reassessment of about 579,000 properties.
Known as a homestead exemption, it's only supposed to be given to people who both own and live in their houses. That means owners of vacant lots or parking spaces need not apply.
But the city has approved homestead exemptions for at least 19 parcels without buildings, according to records from the Office of Property Assessment (OPA).
Marisa Waxman, OPA's assistant administrator, said that means one of two things: Either the property owners committed fraud and aren’t actually eligible for a homestead exemption, or city records are wrong.
It appears to be a little bit of both, actually.
In at least one case, a building was miscategorized as "land" by the city. One of the goals of the city's property tax reassessment, called the Actual Value Initiative (AVI), is to fix those types of errors.
In other cases, the city approved homestead exemptions for properties that clearly are not primary residences, such as a parking space. That's not supposed to happen, either.
Waxman said the city is working to find and address such problems.
"We have 10 months before the homestead affects tax bills," she said. "We will be doing eligibility audits on the approved applications going forward."
The city approved homestead exemptions for a total of 182,089 properties.
Waxman also warned that people who knowingly file a false application could face a $2,500 fine and misdemeanor charge.
City Controller Alan Butkovitz, a critic of AVI, said the discrepancies are not a good sign for the reassessment.
"This is another indicator of the unreliability of city records," he said. "You need to test for your own error rate before you send an announcement to everybody that may trigger mass sales, may undermine neighborhood property values."
University of Pennsylvania economist Kevin Gillen, who consulted the city about AVI, said that mistakes happen. However, he argued that the perfect should not be the enemy of the good.
"AVI should be thought of as a process, not a product," Gillen said. "There will be continued revisions that make improvements to the data going forward."
The city also approved homestead exemptions for 30 commercial properties and five industrial properties.
Waxman said such buildings can qualify for a partial exemption if they have a residential component.