Since 2003 Allegheny County has offered a flat, uniform deduction of $15,000 from the assessed value of owner-occupied property. The ability for the County to make the deduction-known as the Homestead Exclusion-came from statewide approval of a Constitutional amendment in 1997. The exclusion saves an owner $70.35 per year on their County property taxes.
With the debate over a possible 1 mill increase in the property tax and the limitations on that happening (the Charter requires a 2/3rds vote to pass, and a separate state law, Act 71 of 2005, provides additional limitations on tax increases during reassessment years) the idea of eliminating existing tax exemptions like the Homestead Exclusion have been raised. There are other discounts the County offers to senior citizens and other classes of property, but the Homestead Exclusion is by far the largest, reducing the County’s property tax revenue by $21 million in 2012.
What are the downsides to getting rid of the Exclusion? Since it is a flat dollar amount the benefit is much greater for owners of less-expensive homes, making the exclusion elimination a regressive action. The County Executive-elect noted “If you get rid of the homestead exemption, then you’re raising taxes on the people who can least afford it.” To be sure, the owner of a house assessed at $60k is going to benefit a lot more in percentage terms than someone owning a house assessed at $300k.
There is also the complicating factor of the looming reassessment and what the County’s total tax levy will be.
Of course, the existence and the amount of the Exclusion is solely at the discretion of the County government. The County did increase the Exclusion from $10,000 to $15,000 in late 2003-so it is possible the County could roll it back to its initial amount or phase it out completely if it was inclined to eliminate the deduction. That, combined with a millage increase, would certainly not be a popular move, nor would just ending the Homestead Exclusion while leaving the other exemptions in place.
