One-Year Window for Philadelphia’s 10-Year 100% Residential Property Tax Abatement

A bill passed last week by Philadelphia City Council and expected to be signed into law by the Mayor, effective for applications after 2020, reduces by 45% the benefit of Philadelphia’s 10-year property tax abatement for residential real estate improvements. For the past two decades, the abatement has been 100% of the increased assessment attributed to improvements for each of 10 years. It is applied equally to residential properties and non-residential properties (except hotels).

For residential applications filed in 2021, (non-residential properties are unaffected), 100% of the value of new construction or improvements will be exempt only for the first year of the increased assessment and then reduced by 10 percentage points per year until, as under the current rule, the full value is taxed starting in the 11th year. This 10%/year sliding scale (exemptions of 100%, 90% 80%, 70%, 60%, 50%, 40%, 30%, 20 % and 10%) is one of three options under the authorizing state statute and also typically used for non-residential properties where the abatement program is adopted by Pennsylvania localities outside Philadelphia. Non-residential projects will continue to enjoy 100% exemption for each of 10 years.

A prerequisite to file the abatement application is the issuance of a building permit. Developers should consider the consequences of building permits issued or not issued by December 2020. In addition to securing property tax abatements, Stevens & Lee’s State and Local Tax Group has helped numerous clients with complying and minimizing the maze of Philadelphia’s taxes, some unique to the City.

For information on this matter, please contact Thomas A. Bowen at, or the Stevens & Lee attorney with whom you regularly work.

This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.