AVI should be thrown out completely. The last sale price x inflation should be the current value. When the house sells again the value resets to that sale price. There’s no mystery and no challenging appraisals because there won’t be any. The only exemption would be for an owner-occupied property passed from parent to child. CA, NJ and MA all have similar laws, none perfect, but surely we could improve on them.

Is a mess… and somehow “revenue neutral”

Yes, it makes sense that my house I bought in 1998 for $100,000 should be taxed as if it were worth $140,000 but my neighbor with a smaller house should be taxed on $300,000. That makes sense. Even better for my old neighbor who paid $30,000 in 1980 and will now pay taxes on $80,000. This system will just mean new residents bear all of the tax burden in nice neighborhoods. Or long-time residents are encouraged to leave declining ones because they’re paying far more in taxes than newer neighbors.

welcome to America… when people become slaves of the land.. you never own ing in america if it has a tax on it.. why is there a lifetime tax on land anyways.. oh yeah this is america… you didnt build that.. you dont own that .. bend over its only the beginning

using sale price in an urban setting when you have wildly varying prices from house to house doesn’t work. Maybe SF times some multiplier for a neighborhood or block. That way you don’t have people getting a free ride or newer homeowners getting screwed because they are the last to the party.

Also, nearly all the large commercial properties in Philadelphia will experience large tax reductions. This is because these properties have always been valued very close to market value in order to extract as much tax revenue as possible. This helped perpetuate the corrupt old system. Now it seems anything valued close to market value all along will inevitably experience a tax decrease. AVI looks dead in the water.

[...] Naked Philly is fuming at what it sees as the gross inconsistencies within the property assessment of the Actual Value Initiative, released by the City last week. In a series of blog posts, the site argues that “many properties were never visited by assessors,” and that land values do not affect assessments appropriately. [...]

Exactlly. Take a look at 1537 and 1535 Catharine St. Then look at 1533. Should the latter pay $4000/year in taxes, while the commerical property on the corner (vacant lot via city ordered demo) at 1537 pays around $400. Is that fair? Absurd. But rather than raise their taxes too we should demand that City council and Nutter get rid of AVI and decrease the size and scope of City government, especially their spending on new departments like OPA. Basically, they are scapegoating tax abated properties and vacant lots, so homeowners who see increases under AVI will blame them, not their political masters in council and the mayors office.

Nobody who has been paying taxes on their property for years is “getting a free ride”. Their cost basis is lower, that’s all.

Your alternatives (since you didn’t present one) are the status quo or AVI, which is clearly flawed before it’s even started. If you think that a 4-600% increase in property taxes aren’t going to chase out a lot of mid to long term residents and anyone with a tax abatement set to expire you’re sorely mistaken. In addition to punishing people for making improvements to their property, AVI is going to roil the real estate market and housing tenure in those neighborhoods for years. You’re basically pinning your hopes on the idea that there are tens of thousands of current and potential homeowners who are willing to pay suburban style taxes (wage + property) to live in neighborhoods with bad schools and worse crime.

Beyond that, I don’t know of a neighborhood in the city with declining property values . . . and even if you were to find one 20 years from now the lower taxes would be an incentive for people to invest there. The disincentive for longer term residents moving to a different neighborhood would be the higher taxes they would likely face if they moved.

If you were really worried about equity in who pays what you could easily change the real estate transfer tax to a straight line tax between the purchase price and the eventual sale price so that the city recaptures the “lost” revenue from any profit made on the house. Finally, the city doesn’t collect and distribute taxes by neighborhood. It’s a city-wide effort.

Most people carry a mortgage and these increased taxes will mostly translate to lower home values as people in gentrified neighborhoods will shift a share of their monthly payments from loans to taxes. Current owners won’t flee nice neighborhoods because they want to get back the money they can on their houses but they will deal with the fact that higher taxes have made their houses worth less. My taxes are set to increase by about $1,000. At 4% interest rate, a thousand bucks finances about $18,000 worth of loan. My guess is the increased property tax makes my house worth about that much less.

My proposal would be a $500-1,000 city services tax as your base property tax and then a below 1% rate for a land value and improvement tax weighted heavily towards the land value. Land values are easier to calculate and it will get rid of the problem where vacant lots are cheap to hold on to.

That being said, both AVI and the current system are better than taxing at the amount from the last sale. I don’t think your transfer tax idea helps either since how are you going to make up for decades of undervaluing in one transfer–it would make purchasing a home which has increased greatly in value impossible.

[...] Mr. Fox at NakedPhilly finds a pretty important error in the city’s assessment numbers: Issue 2) Land in Philadelphia is dramatically underassessed [...]

[...] greet Philly’s citywide real estate reassessment (The Philadelphia Inquirer|Philly.com) More AVI Analysis: Land Is Apparently Worthless in Philadelphia (Naked Philly) The Navy Yard offers a master class in sustainable strategies (Flying Kite) District [...]

[...] that assessors never actually visited any properties, and we lamented the fact that the OPA has severely undervalued land across the entire city. Today, we reflect on perhaps the most alarming aspect of AVI that we’ve discovered so far: [...]