Allegheny County Reassessment: What Landlords Need to Know

Allegheny County landlords just received some potentially major news.

Today, an Allegheny County judge ordered a reassessment of all real estate in the County. The County's current assessments are largely based on 2012 property values, despite enormous changes in the Pittsburgh area real estate market since then.  For landlords and real estate investors, the eventual impact could be significant.

Does This Mean Your Property Taxes Are Going Up?

Not necessarily.  When a countywide reassessment occurs, taxing bodies generally cannot simply apply their existing millage rates to dramatically higher assessments and collect a massive windfall.  The more important question is: How much has your property appreciated compared with the rest of Allegheny County?  If your rental property has increased substantially more than the countywide average, you could end up carrying a larger share of the tax burden. Properties in areas that have appreciated less could potentially see the opposite.

Why Landlords Should Care

Property taxes are one of the largest expenses associated with owning rental real estate.  Even an additional $2,000 or $3,000 per year can materially affect the cash flow of an investment property - particularly when combined with rising insurance, maintenance and labor costs.  Investors should also be careful when underwriting new acquisitions. Today's property tax bill may not represent the property's long-term tax burden.  Consider stress-testing potential purchases against higher property-tax scenarios before assuming the current numbers will continue indefinitely.

What Should Landlords Do Now?

Don't panic. The reassessment won't happen overnight.  The judge’s order, while setting strict timelines for the process, does give a long fiver-year runway for completion. For now, landlords should monitor the process, make sure County records accurately describe their properties and begin considering how different tax scenarios could affect their portfolios. After more than a decade using 2012 values, Allegheny County's property tax system appears headed for a major reset.  There will almost certainly be winners and losers.  For Pittsburgh landlords, the important thing is knowing your numbers - and being prepared before the new assessments arrive.