Buying a home may be the biggest investment many people will ever make. In the United States, achieving home ownership represents success and an improved quality of life for many people. Owning a home, or any property, however, comes with the added costs of a mortgage, insurance, maintenance and property taxes.
When calculating the total cost of home ownership, it’s important to account for the expense of property and other local taxes, and to know you are getting the best services for the amount you pay. Property taxes pay for public education, libraries, transportation, road construction and maintenance, emergency services, parks and recreational facilities. While low taxes are appealing, excellent services are also important for maintaining quality of life and preserving real estate values. For those considering a home purchase in Pennsylvania, property tax information and county rankings for each county are readily available online.
Property taxes in Pennsylvania, as in most states, are determined county by county, and include county, municipal, and school district taxes. In Pennsylvania, homeowners are assessed property taxes that range from 1 to 2 percent of the assessed value of their residence, with an average effective tax rate of 1.55%. Tax assessors determine the tax burden for each property by assessing the value of the land and any buildings on the property. Pennsylvania uses a system called the mill levy for calculating property taxes, which assesses $1 in taxes for each $1,000 of property value.
Because property taxes in Pennsylvania are in the high range for the United States, there has been debate in recent years about changing the property tax structure to exclude public school costs, which make up the bulk of homeowners’ tax bills, and cover education costs, instead, through increases and additions in sales and personal income tax. The bill under debate, the Property Tax Independence Bill, controversial for a number of reasons, has not garnered enough votes to pass in the state legislature.
Some tax relief for homeowners and renters is available for certain Pennsylvania residents. Seniors, 65 and older, widows and widowers over 50, and certain disabled taxpayers who meet income requirements, may be eligible for the Pennsylvania Property Tax and Rent Rebate Program. Residents wishing to take advantage of this program must fill out Form PA-1000.
In some areas, high taxes make otherwise affordable properties unattractive to many homebuyers. The key is determining if the property tax will fit in your budget, and if you see the value in the higher cost.