One of the most common questions buyers ask is whether property taxes increase when a property is sold. The answer depends heavily on where the property is located. Property tax reassessment in Pennsylvania and Maryland works very differently, and misunderstanding those differences can lead to unexpected tax increases after closing.
Let’s walk through how each state handles assessments and what buyers should be paying attention to before they purchase.
How Property Tax Reassessment Works in Pennsylvania
Pennsylvania is one of the few states that does not automatically reassess a property when it is sold. In most transactions, the assessment stays the same even though ownership changes hands.
However, that does not mean buyers are completely in the clear. While PA does not reassess as a standard practice, taxing authorities will often review a sale after it closes. They compare the sale information with the existing tax record to look for discrepancies.
The stated reason is to check for errors, but in practice, they are often looking for an opportunity to increase the assessment.
For example, imagine a buyer purchases a 15-unit apartment building. The tax record may list the property as only 12 units. When the assessor reviews the sale and notices the mismatch, they can legitimately update the assessment to reflect all 15 units. That correction alone can trigger a tax increase.
This is an important detail in understanding property tax reassessment in Pennsylvania, because PA’s increases often come from record corrections rather than market-based reassessments.
What Buyers Should Know Before Closing in PA
To reduce the risk of a surprise tax bill, buyers should review the tax record carefully before closing. Make sure it accurately reflects:
- the number of units
- the square footage
- any garages or auxiliary structures
- the general property classification
If the tax record does not match the property you are buying, the sale itself may prompt the assessor to make changes. Catching errors early gives you a chance to plan or challenge the assessment later if needed.
And if an increase does occur, buyers should not assume it is correct. Appeals are an important part of the process.
In one recent transaction, a taxing authority attempted to include a large on-site garage as finished living space, dramatically increasing the assessment. The owner appealed and won because the space was not finished and should not have been taxed at that rate.
Knowing the facts and standing by them matters.
How Property Tax Reassessment Works in Maryland
Maryland takes a very different approach. In Maryland, properties are reassessed every three years, regardless of whether they are sold.
During each reassessment cycle, the taxing authority reviews the market and recent comparable sales to determine whether values have increased. If the market has gone up, there is a strong chance your assessment will increase as well.
That means buyers should expect higher taxes over time, especially if they are purchasing in a rising market. This is a key difference in property tax reassessment in Pennsylvania and Maryland that buyers must account for when underwriting deals.
The good news in Maryland is that assessment increases are phased in over three years. Instead of receiving one large tax bill all at once, the increase is spread evenly across the following three years.
This phased approach makes it easier for owners to plan and absorb the increase gradually. While the total tax burden may still rise, the impact is less abrupt than in states that reassess immediately at full market value.
Even so, buyers should still factor future tax increases into their projections. Assuming current taxes will remain flat can lead to inaccurate cash flow expectations.
Final Thoughts
Property tax reassessment in Pennsylvania and Maryland follows two very different systems, and both require careful attention from buyers. Pennsylvania may not reassess automatically, but sales can trigger reviews that uncover record discrepancies. Maryland reassesses on a set cycle, with increases phased in over time.
Many investors we work with appreciate having clarity around how property taxes may change after a purchase. If you are considering buying property in Pennsylvania or Maryland, contact us to discuss how to evaluate tax risk and factor assessments into your investment strategy.
