Within the last three- five years, there has been an increase in properties being hit with a notice of new assessment after a recent sale.
I have received this type of notice for one of my investment properties, along with many other clients we have worked with. For investors who do not understand the process, they may accept it as inevitable, while those who are knowledgeable about property taxes and the appeal process can come out ahead.
A reassessment because a property sells is technically not legal in PA, because taxes are only reassessed when a county does a county wide reassessment. A specific ‘spot assessment’ would be an unfair change.
However, a County can ‘Correct’ at any time. School districts can also file appeals for taxes to be reconsidered if they think there is a discrepancy. These two options open the door for property taxes to be reviewed when a property sale takes place.
For investors looking to make an acquisition, here is what you need to incorporate into your underwriting to make sure you come out ahead.
1) Understand why assessments jump after a sale (even without renovations)
Pennsylvania counties don’t all reassess on a regular schedule, and many operate with outdated base-year assessments. That creates a mismatch: market values grow, but assessments may lag until something “triggers” scrutiny.
Common causes of increases:
- The sale itself becomes a data point
Even if the county shouldn’t automatically reassess purely because a property sold, in practice the recorded sale price can draw attention—especially if the new purchase price is far above the current assessed value when applying the Common Level Ratio. (Discussing in depth below) The County will often look for discrepancies on the tax record for these properties in order to justify an increase.
Underwriting takeaway:
Always check the assessment record, to confirm the details on the record conforms to the property you are purchasing. These details can include the Square Feet of the property, acreage, unit count, amenity or other property feature. If you see discrepancies between the marketing information and the tax record, so will the taxing authorities, and you should underwrite for a potential increase in taxes.
- Interim assessments due to physical changes
Add units, finish basements, build garages, upgrade systems tied to permits, subdivide, or materially improve the property and you can see areassessment due to the increase in value that your permitted activity on the property created.
Underwriting takeaway:
If your plan is to complete a value-add upgrade, consider doing changes that do not require permits (like installing granite countertops) that will increase your NOI without notification to the tax authority. After the sale closes the tax authority will only receive notice of items involving permits, as the municipalities that issue them are required to notify the tax office.
These notices from permits will then trigger an interim assessment, so if you are making changes involving permits, underwrite a lift in taxes into your numbers.
Know your rights:
On my investment property that I received a notice of increase of assessment- We had visually improved the property with a replacement of appliances, painting, pavement lining, and other more routine maintenance items. These items were a maintaining of property, not improvement, which did not constitute an increase in taxes. We filed an appeal and won because we knew the facts of how and when taxes are permitted to be increased.
- Countywide reassessments
When a county completes a countywide reassessment, large shifts occur and many taxes receive an increase that may be outsized relative to the comparables. Lancaster County does now have an ordinance to reassess every 7 years, so this County is again coming up for a reassessment, while many surrounding counties are not.
Underwriting takeaway:
If there is a County wide reassessment, carefully review the new assessment and similar properties to yours. If your property is higher- consider if you are unfairly higher than like kind property and file and appeal.
2) Do not Treat current taxes as “stable” in your pro forma
If you underwrite to the seller’s current tax bill without stress-testing assessment risk, you can overpay.
Before you remove contingencies, do this three-part test:
- Compare assessed value to purchase price
Look at your purchase price, relative to the assessment of the property. - Look up the county’s Common Level Ratio (CLR)
PA uses a county-specific Common Level Ratio in assessment appeals to translate market value into an implied assessment level (because counties assess at different percentages of market value). The PA Department of Revenue publishes these ratios. - Estimate a “post-sale likely assessment” scenario
The price you’re paying for the property does not necessarily become the ‘Market Value’ for tax appeals. You should look carefully at comparable properties (Condition, location, unit count, age, etc) then look at what the value of your property should be relative to those other properties.
Then- make adjustments. There could be a great reason why your property is worth less, for tax reasons, if it has a utility easement, outdated features and so on. Once you have arrived at what the ‘Fair Market Value’ for tax purposes should be, then go to step #4.
4. Implied assessed value ≈ ‘Fair Market Value × CLR (or county’s applicable ratio guidance)
Then multiply by total millage to model a conservative tax bill.
EXAMPLE:
For 2025, Dauphin County’s CLR is 2.31. Here’s how to use that:
Let’s say Kim purchased a building for $1,800,000. Her building is currently assessed at $693,000. When you take the assessment and multiply it by the CLR, you get the supposed market value. So, $693,000 x 2.31 = $1,600,000. This means that since Kim actually paid $1.8M, the school district could file an appeal to increase the assessment to match the higher sale price. $1.8M / 2.31 = $779,220.
If Kim could make the case that other similar buildings to hers are assessed at a similar amount per unit at $1.6M, then if an appeal does come, she is ready to defend against it. This is important to do BEFORE CLOSING on a building, so you know if the tax situation is likely to change.
This isn’t perfect, but it’s far better than assuming the prior owner’s bill is your future.
3) If you get a notice: Know the appeal windows
Pennsylvania assessment appeals are handled at the county level, and deadlines vary. Many counties use an annual appeal deadline around August 1 for the following tax year, but there are important exceptions and variations
Action rule: the moment you receive any “notice of assessment change,” treat it like a countdown clock. Some counties require interim appeals within a short period (commonly stated as 20-40 days in county rules).
Don’t worry, you’ll be prepared because you already underwrote it before you purchased the property. Make sure you do the work to file the appeal and show up and you’ll be ahead of 95% of the property owners that receive these notices.
4) How to provide a strong appeal
A tax appeal is not just “taxes are too high.” It’s a valuation case.
Best evidence for multifamily
- Income approach support: actual rents, vacancy, operating statements, market cap rate support.
- Comparable sales (carefully selected): similar asset class, condition, location, unit mix, and sale date.
- Appraisal: often the cleanest way to present a defensible value, especially for larger buildings.
I like to look at all the above ways to arrive and value- and then select the one that provides the most convincing case.
- For details on how to understand and file an appeal, read our previous article here:
and here on Reassessments:
https://capstonecre.com/blog/pennsylvania-property-tax-assessments-and-appeals/
In some jurisdictions, the taxing authority can respond aggressively, especially if you bought at a high price. Don’t file a casual appeal without running the numbers and understanding exposure.
Especially for newer properties that are 15 years old or newer, these are typically assessed at a much higher rate and this means that your comparable properties are going to show a higher tax basis.
- Members of the appeal board are typically professionals like appraisers and realtors within the local market. This means that you will generally receive a very factual and reasonable review as long as you provide the data for your position.
Bottom line:
Tax risk in PA is under-writable, if you understand how to handle the process and know the system.
For multifamily investors in Pennsylvania, the winning approach is simple, knowledge is power, and for investors who are well equipped, they will find their properties on solid footing.
CALL TO ACTION:
Many clients we work with appreciate the insight we can help provide to make sure their investments stay on solid financial footing. If you are looking to wisely grow your real estate portfolio, reach out to us today to start your plan of action.
Sources:
https://www.adamscountypa.gov/departments/taxservices/rulesguidelines?utm_source=chatgpt.com
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.mercercountypa.gov/tax/assessment/Forms/2017_APPEAL_PROCEDURES_RULES_AND_REGULATIONS.pdf?utm_source=chatgpt.com
https://www.flblaw.com/how-to-appeal-pennsylvania-property-tax-assessment/?utm_source=chatgpt.com
https://www.montgomerycountypa.gov/m/faq?cat=37#question-284
