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What are homesteads and median assessed value?

What are homesteads and what is median AV of homesteads? We’ve been covering aspects of school district assessed value and the property tax process over the last week, illustrating, for example, number of districts with declining assessed value and ratios between assessed value and market value. Today, we introduce homesteads and relate homesteads and assessed value in the property tax process.

In brief, a homestead is very much like a home or household, however, homestead represents the physical property of a home or household.

According to the PA Department of Community and Economic Development, a homestead is defined as a dwelling, including the parcel of land on which the dwelling is located and the other improvements located on the parcel for which any of the following apply:

  1. The dwelling is primarily used as the domicile of an owner who is a natural person. The homestead for real property qualifying under this paragraph shall not include the land on which the dwelling is located if the land is owned by a person other than the person who owns the dwelling. 

  2. The dwelling is a unit in a condominium as the term is defined in Section 3103 of Title 68 of the Pennsylvania Consolidated Statutes and the unit is primarily used as the domicile of a natural person who is an owner of the unit; or the dwelling is a unit in a cooperative as the term is defined in Section 4103 of Title 68 of the Pennsylvania Consolidated Statutes and the unit is primarily used as the domicile of a natural person who is an owner of the unit. The homestead for a unit in a condominium or a cooperative shall be limited to the assessed value of the unit, which shall be determined in a manner consistent with the assessment of real property taxes on those units under Title 68 of the Pennsylvania Consolidated Statutes or as otherwise provided by law. If the unit is not separately assessed for real property taxes, the homestead shall be a pro rata share of the real property. 

  3. The dwelling does not qualify under the criteria listed above and a portion of the dwelling is used as the domicile of an owner who is a natural person. The homestead for real property qualifying under this paragraph shall be the portion of the real property that is equal to the portion of the dwelling that is used as the domicile of an owner.
Based on this definition, there are approximately 2.66 million homesteads throughout Pennsylvania and districts can range in the number of homesteads from as little as a few hundred to several thousand, depending on the size of the district.

Like all other real estate property, each homestead has an assessed value (AV). Property taxes are levied upon the AV of the homestead and paid by the owner.

As required by law, school districts submit data each year in their final budgets related to homesteads, including median AV and the number of homesteads. Median AV represents an average-level AV for all homesteads in that school district, much like median household income represents the average-level income in a household in that school district.

The homestead median AV between two school districts in separate counties may be drastically different in part because of the ratio between AV to market value (MV) within that county. If a school district's AV is only 25% of its market value in one district and 87% in another, the median AV of a homestead in each district will be very different.

Because of this variance, we cannot compare the median AV of a homestead between districts. However, by calculating an effective tax rate for each district, i.e. the ratio between total property taxes levied (before any tax relief or adjust by the collection rate) and the total AV, we can estimate and compare for each school district an approximate tax bill levied on a homestead at the median AV.

For example, the median AV of a homestead in Bellwood Antis SD in 2018-19 is $144,500. With a total AV of $609,342,600 and a total tax levy of $5,569,391 (note: this is not the same as property tax revenue, which is actual property taxes collected), the effective tax rate is 9.14 mills. The tax bill (median AV multiplied by mills) results in $1,320.73 of taxes due on the median homestead.

Click on the image link below to view our interactive map illustrating for each school district (excluding 5 with insufficient data), the number of homesteads, the median AV of homesteads, and the approximate tax bill levied on a homestead at the median AV for 2018-19.