If you’ve received your real estate tax bill (school tax), some of you are probably experiencing sticker shock when you see how much more you’re asked to pay compared to last year. Here’s a condensed description of what’s going on.
What’s a Homestead Exemption?
There are 4,179 approved homeowners living in the Chester-Upland School district who receive a Homestead exemption on their real estate tax bill. The school district must reduce the taxes of these homeowners by $3,470,352.25, or by $830 for the average homeowner eligible for the reduction. (Homes in Chester City, Chester Township, and Upland Borough comprise the Chester-Upland school district).
The method used to reduce Homestead household taxes is the portion of the bill called the exclusion which is subtracted from the assessed value of your home.
Last year, the exclusion was $45,741.79. This year it’s $12,313.
A tax calculation comparing last year and this year’s exclusion?
A home assessed at $62,340 paid $252 in real estate taxes last year. This year they pay $746. Two things didn’t change: the assessed amount of the home ($62,340) and the tax rate (15.22ML). What did change is the exclusion amount the school district applied to everyone’s bill used to reduce the tax bill.
In this calculation, there’s a $500 increase in real estate tax over last year.
To be fair, there is still a tax reduction for the homeowner due to the Homestead exemption. In the example used above, the homeowner would have paid $948 instead of the $746, saving about $200. But, that same homeowner saved nearly $700 with the Homestead Exemption the year before. Would you rather save $700 or $200 on your tax bill?
What is the district doing with the rest of the money?
Where the math doesn’t add up for me goes back to the paragraph 2 where the state instructed the school district to reduce Homestead homeowners in the district $3,470,352.25. The school district reduced the exclusion from $45,741.79 to $12,313 (or $696.19 vs $187.40 per household after applying the tax rate). When you multiply 4,179 households times $187.40 you get $783,144.60.
Out of the $3,470,352,25 the school district is supposed to reduce tax by for Homestead home owners, they are only reducing taxes by $783,144.60. Why are they holding back on $2,687,207.65?
Questions to ask your school district
Why did you change the tax calculation?
Why are you holding on to $2.6 million that should be going to Homestead households?
Why didn’t anyone get notified of these tax calculation changes in advance?
How can we appeal?
Do you have a payment plan for those who cannot absorb the huge tax increase?
Are these drastic tax increases going to occur again?
Is this a one year anomaly?
The future cost of living in Chester
It’s becoming increasing clear that owning a home in Chester is not the bargain that it once was. Everything about home ownership in Chester is increasing.
Some examples of what we’re likely to see increase starts with how homes were grossly under assessed before the county did a new assessment a couple years ago. That $62,340 home used in our example was assessed at $15,000 just three years ago. Chester property owners got hit with a monthly stormwater fee that has increased by 25% since its inception a few years ago. Delcora rates increased by double digits thanks to federally mandated work they are required to do with no federal funds to pay for it (this doesn’t factor in the Tunnel Project). PECO rates are always on the rise for natural gas and electricity. Chester Water Authority rates are holding firm for now but the company’s future is uncertain as are their rates. And then there’s the other inflation related factors raising the cost of food, gasoline, home heating oil, and even a postage stamp.
Most of those increases have a valid explanation. We deserve to hear one from the Chester-Upland School District.
What is the Homestead Tax Act Exemption and how to apply?
The Taxpayer Relief Act provides for property tax reduction allocations to be distributed by the Commonwealth to each school district.
Most owner occupied homes are eligible for property tax reduction. Only a primary residence is eligible for property tax relief.
To receive school property tax relief for tax years beginning July 1 or January 1, an application for homestead or farmstead exclusions must be filed by the preceding March 1. School districts are required to notify homeowners by December 31 of each year if their property is not approved for the homestead exclusion or if their approval is due to expire. To see the format for the Homestead/Farmstead application, please visit the Application for Homestead and Farmstead Exclusions.
Homeowners should contact their county assessment office for a copy of their county’s homestead and farmstead application form.
According to the census, Chester City has 12,030 households and 31.7% of them are owner occupied. If you insert a little fudge factor, just about every owner occupied home in Chester is benefiting from the Homestead Exemption.