What is up with the BRT? - PhillyBlog

agphillybtown · #1 (**permalink**) 08-07-2007, 09:36 PM

So, I'm in the beginning phase of looking for a house, and I can't seem to figure out the the BRT listings. The one house I've called about is being offered at $140,000 and is listed on the BRT website at a market value of $9,400. Is there any logic behind these numbers whatsover? Last sale was listed as being for $1, I assume that has something to do with it...

Altamont · #2 (**permalink**) 08-07-2007, 10:27 PM

The BRT isn't particularly useful for the things you seem to be looking to learn. BRT stands for Bureau of Revision of Taxes and was created to address the relationship between "actual values", "assessed values" and "taxable values" and how the tax rate and actual tax for any given property are determined. As a prospective buyer, you may want to look into the BRT and the tax issues it is addressing (historically Phila properties have an assessed value of 1/3 actual value -- a theoretical view of history which is more often inaccurate than true -- the BRT is an attemtp -- a very awkward attemt to address at least some of the inequity which flowed from the past / current system);but they (assessed and taxable values) are irrelevant to your main point -- your attempts to value prospective properties. Similarly, $1 and $10 sales are not actual sales prices, but reflect close transfers (say between husband and wife or business partners). Disregard those. Best way to obtain comps is teh old fashioned way: ask a real estate agent to run an MLS report of recent sales for you.
Good Luck!

random · #3 (**permalink**) 08-07-2007, 10:35 PM

You think the BRT makes property taxes hard to decifer?

Here, this will explain everything:

http://www.steb.state.pa.us/

PS: for you tax reformers out there, the coefficient of dispersion for Philly for 2006 was 39.5. We should all file appeals until the knuckleheads at the BRT straighten this out.

Doh! Wait! Don't do anything! The city's five year plan filed with PICA projects real estate tax revenue to increase over 6% every year for the forseeable future. Revenue neutral? My a$$.

Shosh · #4 (**permalink**) 08-07-2007, 10:53 PM

Quote:

Originally Posted by random

You think the BRT makes property taxes hard to decifer?

Here, this will explain everything:

http://www.steb.state.pa.us/

PS: for you tax reformers out there, the coefficient of dispersion for Philly for 2006 was 39.5. We should all file appeals until the knuckleheads at the BRT straighten this out.

Doh! Wait! Don't do anything! The city's five year plan filed with PICA projects real estate tax revenue to increase over 6% every year for the forseeable future. Revenue neutral? My a$$.

Philly is in great shape compared to some of the more rural areas of the state, where for years the school districts have been appealing tax assessments whenever a house is sold. In all such cases, the boards reassessed by multiplying the sale price by the predetermined ratio set at the most recent county-wide reassessment. The thing is, in December, 2006, the PA Supreme Court held that was unconstitutional. So now, the school districts continue to appeal, but the boards must apply, at most, the common level ratio. Result? Well, in Carbon County, a house that hasn't sold since 1999, valued at that time at 100,000, has an assessed value of 50,000 (the predetermined ratio is 50%). Let's say the house next door built at the same time by the same builder using the same plans and materials was sold in 2002 for 300,000 (quite likely given the way home values increased), it would have been reassessed at $150,000 -- that homeowner is paying 3X as much in taxes as his neighbor. A third identical house was sold in 2006 for the same $300,000 (prices have flatened out). It will most likely now be assessed at $96,300 (because the current common level ratio is 32.1%). That's nuts, and certainly not "uniform" as required by the PA constitution.

(OK, I know that this is incredibly boring and probably makes no sense to most people, but given that I'm in the middle of an assessment battle, I'm totally obsessed by this stuff).

random · #5 (**permalink**) 08-07-2007, 11:05 PM

Quote:

Originally Posted by Shosh

Philly is in great shape compared to some of the more rural areas of the state, where for years the school districts have been appealing tax assessments whenever a house is sold. In all such cases, the boards reassessed by multiplying the sale price by the predetermined ratio set at the most recent county-wide reassessment. The thing is, in December, 2006, the PA Supreme Court held that was unconstitutional. So now, the school districts continue to appeal, but the boards must apply, at most, the common level ratio (what you've terms the coefficient of dispersion). Result? Well, in Carbon County, a house that hasn't sold since 1999, valued at that time at 100,000, has an assessed value of 50,000 (the predetermined ratio is 50%). Let's say the house next door built at the same time by the same builder using the same plans and materials was sold in 2002 for 300,000 (quite likely given the way home values increased), it would have been reassessed at $150,000 -- that homeowner is paying 3X as much in taxes as his neighbor. A third identical house was sold in 2006 for the same $300,000 (prices have flatened out). It will most likely now be assessed at $96,300 (because the current common level ratio is 32.1%). That's nuts, and certainly not "uniform" as required by the PA constitution.

(OK, I know that this is incredibly boring and probably makes no sense to most people, but given that I'm in the middle of an assessment battle, I'm totally obsessed by this stuff).

Psst. Don't tell anyone else. When the coefficient of dispersion gets too high you get to bypass the Philly predetemined ratio and instead use the STEB common level ratio. The predetermined ratio is 32%. The common level ratio was 28.4% for 2006. Like I said, keep this a secret.

Wait! Did I just post this? Doh!

PPS: Uniformity challenges still have legs provided that you present evidence of the market value (i.e. pay for an appraisal) of the comparable properties you allege are taxed lower than yours. Gets expensive. Using the common level ratio is a quick, cheap haircut on your taxes (unless you are undertaxed such that you should be ashamed of even thinking of this -- I'm surely not).

Shosh · #6 (**permalink**) 08-07-2007, 11:19 PM

Quote:

Originally Posted by random

Psst. Don't tell anyone else. When the coefficient of dispersion gets too high you get to bypass the Philly predetemined ratio and instead use the STEB common level ratio. The predetermined ratio is 32%. The common level ratio was 28.4% for 2006. Like I said, keep this a secret.

Wait! Did I just post this? Doh!

PPS: Uniformity challenges still have legs provided that you present evidence of the market value (i.e. pay for an appraisal) of the comparable properties you allege are taxed lower than yours. Gets expensive. Using the common level ratio is a quick, cheap haircut on your taxes (unless you are undertaxed such that you should be ashamed of even thinking of this -- I'm surely not).

Under the applicable statutes (still on the books), the CLR could be used only if it was 15% different thant the Predetermined Ratio. Fortunately, that's the exact statute (it's actually three statutes, each applying to a different set of counties) that was ruled unconstitutional in the Downingtown School District case. Uniformity challenges now have stronger "legs" thanks to Downingtown. In most counties (I never did an appeal in Philly, so I can't speak to it), you could get all the appraisals you wanted, but the boards would still apply the predetermined ratio, and the appellate courts routinely upheld them.

This is the first year of appeals post Downingtown and it will be quite interesting to see what the tax boards in those rural counties will do now -- and how the school districts will continue to fund all their new buildings and programs without their "welcome neighbor" taxes.

random · #7 (**permalink**) 08-08-2007, 12:04 AM

That's "welcome stranger" taxes.

PS: It just hit me. You must be a lawyer prosecuting a tax appeal in the 'burbs, not somebody just dealing with your place here. Good luck with it.

raider.adam · #8 (**permalink**) 08-08-2007, 05:06 AM

Quote:

Originally Posted by agphillybtown

So, I'm in the beginning phase of looking for a house, and I can't seem to figure out the the BRT listings. The one house I've called about is being offered at $140,000 and is listed on the BRT website at a market value of $9,400. Is there any logic behind these numbers whatsover? Last sale was listed as being for $1, I assume that has something to do with it...

Use recent sales for comps in guaging house values. Never ever use government appraisals ... that goes no matter where you live.

And all $1 for the last sale means is someone paid $1. It has no other affect.

agphillybtown · #9 (**permalink**) 08-08-2007, 06:54 AM

Quote:

Originally Posted by raider.adam

Use recent sales for comps in guaging house values. Never ever use government appraisals ... that goes no matter where you live.

And all $1 for the last sale means is someone paid $1. It has no other affect.

Good to know, thanks. I was thinking maybe they averaged the appraised price and the last sale and took a ratio of that, but it looks like the whole thing is useless for what I'm looking for. I don't know what kind of shape it's in on the inside yet, but it looks like I could buy it for the same amount I'm paying in rent...

Shosh · #10 (**permalink**) 08-08-2007, 09:19 AM

Quote:

Originally Posted by random

That's "welcome stranger" taxes.

PS: It just hit me. You must be a lawyer prosecuting a tax appeal in the 'burbs, not somebody just dealing with your place here. Good luck with it.

I've heard it called both (neighbor and stranger).

And yes and no. I'm a lawyer, but I'm defending against an appeal brought by a school district, not prosecuting one. And, alas, it is "my place" that's at issue -- just not the house here in Philly.

Now, what's your excuse for knowing this stuff?