There are a number of falsehoods and misconceptions about Philadelphia's 10-year tax abatement. This misinformation could lead some homeowners to not take advantage of the money-saving benefits the city is offering.

What is the 10-Year Tax Abatement?

The 10-year tax abatement means that you don't need to pay additional taxes on home improvements for 10 years. A variety of physical improvements on existing homes, condos and other properties are eligible.

Are New Construction Projects Eligible?

Yes, a new construction project can take advantage of the 10-year tax abatement -- often with substantial benefits. This is because the home represents up to 90 percent of the property's total value so the entire structure is considered to be an improvement. The owner of this new property only needs to pay taxes on the land's value -- an amount that usually represents only 10 to 20 percent of the property's total value.

Does This Mean a Homeowner's Tax Bill Won't Increase?

Not necessarily.

It's important to distinguish between the factors that affect a homeowner's tax bill. In addition to improvements made to the property, such as an additional room or a remodeled kitchen, other aspects that are beyond the homeowner's control could also cause the value of the home to increase. A good example of this is if the neighborhood, in general, becomes more desirable, then the value of the land itself will also increase.

That being said, even if the value of the improvements the homeowner made increases, they won't pay taxes on those improvements until after the 10-year mark.

Is the 10-Year Tax Abatement a Program That's Only Available to Specific Groups?

This is one of the most persistent misconceptions surrounding the 10-year tax abatement. Some people think that this program is a tax break that is limited only to certain types of properties such as construction that is 100 percent new, developers who are wealthy and condos located in Center City.

Every property owner in Philly is eligible for an abatement if they make improvements. They only need to meet three simple criteria.

What Eligibility Criteria Must be Met to Qualify for the 10-Year Tax Abatement?

The process for qualifying for the 10-year tax abatement is one that is simple. However, it must be completed prior to construction beginning.

First, navigate to Philadelphia's Office of Property Assessment (OPA) and complete the abatement application.
Be able to show OPA a building permit that has been approved by Philadelphia's Licenses and Inspections (L&I) department.
Make sure that you are not delinquent on your property taxes.

What's Been the Effect of the Program on Philly?

Across the board, property owners in Philly have realized significant benefits. While the popular belief is that million dollar condos comprise the typical abated property, most are actually single-family homes that are valued between $200,000 and $300,000.

So far, the 10-year tax abatement has spurred revitalization and development in Center City, West Philly, Fishtown, South Philly, Kensington and more. It's projected that this development will continue to expand across the city. In fact, since 2000 when abatement was implemented, Philly has seen a 376 percent growth in its real estate development.

Already, the city is seeing a significant boost in its tax revenue from properties whose abatements have expired. Each year, Philadelphia sees over $48 million in tax revenue from properties that have expired abatements.

Take advantage of this win-win program to save money and improve your property!

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