As expected, City Council on June 13 set a tax rate, or millage, of $1,340 per $100,000 of property value. Members also approved a $30,000 homestead exemption for owners who live in their homes.
With the tax rate and the homestead exemption, property owners can look at the new property assessments they received this year and figure out what their 2014 tax bills will be.
Councilman Bobby Henon (D-6th dist.) said he expects the 100-percent market values along with the homestead exemption and the new tax rate will benefit most Northeast residents. City Controller Alan Butkovitz months ago had projected many in the Northeast would see their taxes dip, remain about the same or go up only slightly in 2014.
If an owner who lives in his home applied for and was granted the homestead exemption, he would subtract that $30,000 from his new assessment before applying a tax rate. For example, the real estate tax on a house with the exemption that is assessed at $180,000 would be figured out by subtracting $30,000 to get the $150,000 value that would be taxed. Since $150,000 is 1.5 times $100,000, multiply $1,340 by 1.5 to get $2,010.
Not voting for either the tax rate or the exemption was Councilman Brian O’Neill (R-10th dist.), who said he favored a lower millage. He added that the homestead exemption not only pushed the rate higher but also sliced so much off the taxable value of about 30,000 properties that their owners will pay no real estate taxes and get city services for free.
“I don’t think that’s right,” he said in a June 14 phone interview.
O’Neill said the Actual Value Initiative assessment along with the new tax rate and homestead exemption does mean a lot of Northeast residents will benefit, but the benefit will be a very small one.
“There would be more benefit,” the councilman said, “if the millage were kept lower.”
He said he would have backed no homestead or the $15,000 exemption Mayor Michael Nutter had proposed in March.
O’Neill said he also opposes so-called “gentrification” or “reverse abatement” provisions that would wipe out tax increases for 10 years for homeowners who will see their assessments triple.
To be eligible, owners would have to have lived in their homes for 10 years, and in some cases, just five years. Income eligibility is too generous, O’Neill said. It’s $83,000 for a single person and $112,000 for a family of four.
“You will not have to pay the tax increase for 10 years,” he said. “You basically have everybody else paying your taxes for you and you never have to pay it back.”
O’Neill said if all tax exemptions would evaporate, the city’s real estate tax rate would be just under $1,200 per $100,000 of property value.
“We should have the lowest possible rate to start off with,” he said.
But since the homestead exemption is a done deal, he feels his constituents should take advantage of it and if they haven’t applied for it yet, they should. ••