Amending the Homestead Property Tax Assessment Exclusion

Article posted on October 2, 2017

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For informational purposes:

In the November 7, 2017, general election, Pennsylvania voters will be asked to consider a proposed constitutional amendment to permit the General Assembly to enact legislation to expand the current homestead exclusion.  The attachment on this page is the Public Notice submitted by the Secretary of the Commonwealth for publication in local print media statewide.

Additional details provided below were prepared by the Senate Republican Policy Development & Research Office:

 

THE HOMESTEAD EXCLUSION CONSTITUTIONAL AMENDMENT

Introduction

On November 7, 2017, Pennsylvania voters will be asked to consider a proposed constitutional amendment to allow the General Assembly to enact legislation permitting local governments to expand the current homestead exclusion.

 

Change to Constitutional Provision

If approved by the electorate, the amendment will allow the General Assembly to pass legislation excluding up to “100 percent of the assessed value of each homestead property within a local taxing jurisdiction” from taxation by local taxing authorities. Currently, the state Constitution allows up to “one-half of the median assessed value of all homestead property within the taxing district” to be exempt from taxation.

Specifically, Article VIII, Section 2 (b) (iv) of the Pennsylvania Constitution states:

(b) The General Assembly may, by law:

(vi) Authorize local taxing authorities to exclude from taxation an amount based on the assessed value of homestead property. The exclusions authorized by this clause shall not exceed one-half of the median assessed value of all homestead property within a local taxing jurisdiction. A local taxing authority may not increase the millage rate of its tax on real property to pay for these exclusions.

 

Amount of Potential Relief/Replacement Revenue

If the amendment is approved, the General Assembly will then have to enact legislation authorizing local governments to exclude up to 100 percent of the assessed value of the homestead property.

Not only will the change increase the amount of the homestead property that may be exempt from local property taxes, it bases that relief on the value of that particular property, not a figure based on the value of all properties in a taxing jurisdiction. The sponsor of the legislation authorizing the constitutional change notes that this legislation provides the potential for “the elimination” – not just the reduction – of residential school property taxes via the homestead exclusion.

The impact the proposed Homestead Exclusion expansion will have on a person’s property taxes and the sources of replacement revenue will ultimately depend on the legislation adopted by the General Assembly and how much of the additional exemption a local taxing authority decides to use. The only thing that cannot happen is that a local taxing authority may not increase the millage rate of its tax on real property to pay for the exclusion.

During this process, local property taxpayers will have the opportunity to lobby their state and local elected officials to craft the property tax structure that best suits their local needs.

Following the adoption of the current homestead exclusion language in 1997, the General Assembly enacted a number of related statutes: Act 50 of 1998; Act 72 of 2004, the Homeowner Tax Relief Act; and Special Session Act 1 of 2006, the Taxpayer Relief Act (this legislation repealed Act 72 of 2004).

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