Every homeowner or landowner wants to pay as little in taxes for their home or property as possible. As discussed in our assessment appeal page, ensuring your property is assessed correctly is one option that can allow you to save hundreds or thousands of dollars. But there are also programs that offer a tax abatement or an exemption that you may be able to greatly benefit from as well.
A tax abatement is a reduction in the property taxes an owner pays for a specific time.
A tax exemption reduces a property’s assessed value which in turn reduces the total tax liability for an owner.
Both the tax abatement and the tax exemption benefit the property owner in the long run. The following is an overview of the different types of tax abatements and exemptions that may be available for Allegheny County residents.
Act 50 (Homestead/Farmstead Exclusion)
Under the Act 50 exclusion, the assessed value of each home is reduced by the same amount before the tax is computed. Act 50 allows for a $18,000 reduction. For instance, if a home is regularly assessed at $200,000.00 and the tax abatement applies, then the assessed value would be $182,000.00. Allegheny County’s tax rate is set in mills at 4.73. Therefore, without the exclusion – taxes owed would be $946 (200,000 x 4.73). With the exclusion, taxes owed would be 860.86 (182,000 x 4.73). The difference is a total of $85.14!
Act 50 applies to property owners, who both own and occupy the property, and use it as their primary residence. It also applies only to:
- Residential properties;
- Farmstead properties, being buildings and structures, used for commercial or agricultural production, on farms of at least 10 contiguous acres and used as a primary residence; or
- Mixed use properties, such as a dentist office on first floor and the primary residence on the top floor of a house.
The deadline to have this tax abatement apply to the current tax year is March 1, and you do not have to apply again if you remain the property owner, have not filed a deed transfer and you continue to use the home as your primary residence.
Additionally, Act 50 applies to Allegheny County. School district and municipalities within the county may participate on an individual basis.
Act 76, also known as the Local Economic Revitalization Tax Assistance Act (LERTA), applies to improvements made on commercial or industrial properties, not to the existing valuation of land.
The tax abatement is filed with the municipality in which the property is located. Individual municipality information can be found here.
Specific improvements covered under Act 76 are:
- New constructions or reconstruction;
- Rehabilitation for deteriorated property related to health/safety concerns; and
- Improvements made for compliance with laws, ordinances or regulations.
The tax abatement, if accepted, takes effect the year after construction is complete and an occupancy building permit is issued.
Act 77, or Senior Citizen Tax Relief, allows senior citizens a 30% flat discount real estate tax.
To qualify, a senior citizen must:
- 1) be age 60 or older, 2) if married – either spouse must be age 60, 3) if a widow or widower, must be 50 to 60 years old, or 4) if permanently disabled be 18 to 60 years old;
- Must have owned and occupied a primary residence continuously for the past 10 years; and
- Have a gross income of $30,000.00 or less.
The deadline to apply for a current tax year is June 30. Once approved, and if you maintain the above eligibility requirements, you do not need to apply for the tax abatement again.
Act 132, known as the Residential Visitability Design Tax Credit Program, is a tax credit program which applies to new construction or renovation projects that grant access into residential housing for disabled individuals.
The total tax credit is the lesser of either $2,500.00 over 5 years or the total amount of all increases in taxes charged by the County or City of Pittsburgh as a result of the construction.
Act 156, better known as the Clean and Green Program, provides for a tax abatement for environmental or agricultural friendly properties. The act was enacted to encourage the protection of farmland, forestland and open spaces.
To qualify, the land must be one of the following:
- In agricultural use, being land used for the purpose of producing an agricultural commodity or meets requirements for payments/compensation pursuant to a soil conservation program;
- In agriculture reserve, being a noncommercial open space land used for outdoor recreation, or for scenic, nature and beauty, and open to the public for use, without fee, on a nondiscriminatory basis; or
- In forest reserve, being land stocked by forest trees of any size and capable of producing timber or other wood products.
Further, to qualify for one of the above designations, the land must be 10 acres in size; or land in agricultural use can be less than 10 acres if it can generate at least $2,000.00 annually in farm income.
Another element to having your property enrolled in the clean and green program is the factor of having a residence or other type of operation related to the same property. Both things are permissible, but certain requirements must be met.
A residence may be constructed, but generally the land split off for the residence must not exceed two acres per year, and can not exceed 10 acres in total, or 10% of the originally enrolled land. Rollback taxes are incurred on the split-off land. The act also allows for a non-rural (or commercial) enterprise to be conducted on two acres or less of enrolled land, in which conduct does not permanently interfere or impede with the agricultural commodity. Rollback taxes would be due on the land affected by the commercial activity.
The deadline to apply for the program is June 1st to be effective the following calendar tax year. Once enrolled, landowners do not need to apply again unless the status of their enrolled land changes. Also note that a landowner who breaches the program’s requirements is subject to penalties of rollback taxes and interest.
Catastrophic Loss / Structural Damage Tax Abatement
This type of tax abatement applies to owners who have had property that has had major structural damage due to a fire or other natural disaster.
The property must have had 50% or more in diminished property value. General evidence that can be used includes, but is not limited to:
- A fire report;
- Insurance report; and
- Estimate of damages.
One can apply for this tax abatement within 6 months of the date of loss, or within the remainder of calendar year, whichever is longer.
There are several exemptions for properties owned by nonprofit organizations and government entities.
The eligible properties include:
- Places of worship;
- Non-profit burial grounds;
- Public property for public purposes;
- Property owned and occupied by any branch of honorably discharged servicemen (women) used for charitable or patriotic purposes; and
- Institutions of purely public charity.
In addition, certain disabled veterans can qualify for an exemption. To qualify, the veteran must be:
- A 100% service-connected disabled veteran, and
- The disability should have occurred during war service period, and
- The veteran must demonstrate financial need for the exemption.
Additionally, the tax benefit may pass to a widow (or widower) upon the death of the veteran, if financial need can be demonstrated.
A more in-depth look at the information contained in this article can be found on Allegheny County’s website. If you believe you may qualify for one of the above tax incentives summarized in this article, please do not hesitate to contact us for further information or clarification. We can help you learn more information about the acts listed herein and can help you in the application process, if necessary.
Financial Security is Just a Phone Call Away
If you or someone you know is concerned about saving money on property taxes or is interested in learning more about tax abatements, the Law Firm of Fenters Ward can assist. Contact us today to get an assessment by filing out this contact form or by calling 877-259-WARD.
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