The Commonwealth of Pennsylvania's state government enacted a law in 2006 known as the Taxpayer Relief Act. The purpose of the Act is to lower the amount of taxes paid by Pennsylvania residents. A specific measure in the Act was the creation of the Homestead Exclusion, which provides a means to lower the property tax bill of eligible property owners. A PA homestead exemption can help you significantly reduce your tax burden at the close of the year.
To be eligible for a homestead exclusion, a natural person must be the owner of the property and that property must be both your domicile and primary legal residence. This means the property must be your actual home and the place you return to regularly. Houses, condos and cooperative apartments are all eligible. The homestead exclusion can be given only for residential use. Therefore, any commercial use of the property would lower the exclusion by the percentage of such business use. However, any property owned by a business entity or that is fully used for business purposes is not eligible for any exclusion.
Understanding the Application Procedure
Eligible property owners have to file an official application with their local County Assessor's Office. The application must be filed by March 1 to receive a homestead exclusion for that year. The Act requires the local school district to mail an application to all property owners in the jurisdiction by the end of each year. The Assessor's office is required to officially notify the owner within 30 days of receiving the application of either approval or denial.
Pennsylvania's homestead law does not set a specific exclusion amount for all eligible residents. Each separate school district sets the exclusion amount for all eligible homes within its district yearly based on financial requirements. The homestead act PA guidelines establish that the Commonwealth will provide a local school district with extra state funding based on need. The poorer the school district, the higher the state funding – and the exclusion amount.
Other Provisions and Regulations
A property owner is allowed to have only one homestead property at any given time. If the owner has any other homestead, even in another state, he is ineligible. A owner whose property becomes ineligible due to a change of status, such as renting it out, must officially notify the local Assessor's Office within 45 days of the change. Improperly securing or retaining a homestead exclusion makes the owner liable to monetary penalties and even criminal prosecution for fraud.
- Commonwealth of Pennsylvania: Homestead Tax Exemption
- Pennsylvania Department of Education: Property Tax Reduction Allocations
- Pennsylvania Budget and Policy Center: Property Tax Relief in Pennsylvania
- Monroe County: Property Tax Relief Monroe County Application for Homestead and Farmstead Exclusions
Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.