Philadelphia is currently undergoing a city-wide property revaluation program, named the Actual Value Initiative (AVI), to correct years of inaccurate property assessments. Currently, property owners in Philadelphia with nearly identical houses are being assessed at different values and pay vastly different property tax bills. AVI’s goal is to correct these disparities and make the city’s property assessment system “fair, accurate, and understandable.”
AVI will fundamentally change Philadelphia’s property tax system. A recent report by the Pew Charitable Trusts’ Philadelphia Research Initiative estimates that the AVI will increase the city’s grand list from $39 billion to about $100 billion. This will result in lower tax rates and higher assessed values for property owners. But it is also expected to shift some of the tax burden from categories of property that have been traditionally overassessed, particularly commercial, industrial, and apartment property, to residential property owners.
The city is considering several policy options to mitigate the increased tax burden on residential property owners. One of the proposals is to redesign the city’s homestead exemption, which reduces the property assessments of owner-occupied homes used as a primary residence.
