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Allegheny county equalization ratio and 2023 valuation appeal updates

Feb. 27, 2023

With major changes in the Allegheny County, Pennsylvania commercial real estate market, property owners should expect to navigate and take advantage of this year’s unique valuation appeal opportunity. Because of the incredible complexities that come with equalization ratio changes and what this may imply for portfolio values moving forward, Baker Tilly’s Pennsylvania property tax specialists' have put together pertinent information to successfully navigate this appeal cycle.

In partnership with Totum Realty Advisors, a Pittsburgh commercial real estate advisory firm, and Erich Feierabend sat down to record Episode 20 of the Trade Secrets podcast, discussing all things property tax, including equalization ratio changes property owners in the area are facing in the coming weeks.

Equalization ratios and the commercial real estate market

The real estate appeal deadline for Allegheny County, Pennsylvania is set for March 31, 2023. This year’s deadline is very important for commercial real estate owners and investors due to the equalization ratio being reduced from 81.1% to 63.6%. This translates to a nearly 28% increase in the market value of all properties in the county at the stroke of midnight on Jan. 1, 2023.

Example: If your property was assessed at $5 million, the implied market value for that property would have been $6,165,228 on Dec. 31, 2022; the implied market value increased to $7,861,635 on Jan. 1, 2023, again a nearly 28% increase.

Further, a recent court ruling which reopens the 2022 tax year to appeal opportunities is also in effect with the same March 31, 2023 appeal deadline. In this instance, an Allegheny County Court of Common Pleas judge ordered the 2022 equalization ratio to be reduced from 81.1% to 63.6% (this ratio is still pending). This ruling sets up the same increase in value scenario described above for the 2022 tax year, leaving commercial real estate owners and investors with additional threat to their bottom lines. This Common Pleas Court ruling was then appealed by the Pittsburgh Public School System to Commonwealth Court where it stands at this time, but it is imperative that both local and national real estate portfolio owners are prepared for potential retroactive changes to their Allegheny County parcels. Read more on the court proceedings here.

Whatever the outcome of the tax year 2022 case, it is imperative that taxpayers have their assessments reviewed by a property tax professional in light of the 2023 ratio being set at 63.6%. Any property with an increase of that proportion needs immediate attention and should not be treated in the same way as any other appeal year.

Our Allegheny County valuation specialists' and commercial property tax consultants at Baker Tilly are completing complimentary desktop reviews and providing recommendations to local commercial real estate owners and nationals (REITs) alike. The Baker Tilly Allegheny County valuation team will assist in creating a strategic valuation appeal system for all effected parcels to achieve the maximum property tax savings during impending equalization ratio changes. If you have any commercial real estate in Allegheny County, it is imperative that you contact our local valuation specialists today, to ensure your appeals are filed prior to the March 31, 2023 deadline.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.