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This is 7563 Battersby St. in Mayfair (left), at the prominent corner of Ryan Ave and Battersby Street.

Back in late December, the U.S. Drug Enforcement Agency and the FBI raided this bucolic Northeast twin and charged two Dominican nationals for running a massive stash house with 12 kilogram blocks of heroin, more than enough to supply all of Philadelphia’s junkies for weeks; over $2MM worth of supply was kept there.

But this story isn’t about Luis Manuel Gomez Rodriguez and Jose Antonio Rosario Reyes the two stash house workers.   This is about the property owners, Guang-Hui Ren and Lin Yun Ren.

The Rens acquired this house in 2009 as outside investors.  Sometime in early-to-mid 2015 they applied for a Homestead Exemption, while the house was still being rented out:

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Meanwhile, over at L&I, there is still a rental license on the property, albeit now just-expired and the rental license clearly shows that the Rens live over in Voorhees, New Jersey:

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Looking at the address in New Jersey, it points to this:

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I don’t know about you but I’m not entirely convinced that Mr. and Mrs. Ren have given up their fully-detached cottage to take up residence in a semi-detached in Mayfair.   The City seems to believe whatever story the Rens told them when they filed their Homestead Exemption, but I’m not convinced.

Given the timing of the Homestead Exemption application it was filed BEFORE the house was raided for its $2 million dollar heroin stash while the Rens were still renting it out.

I’m not the only one who has noticed this discrepancy.   Loads of other people looking into property issues have been noticing more and more rental properties similar to this one—claiming the Homestead Exemption to skip out on paying some Real Estate Taxes with renters living inside the building.

The Homestead Exemption is only eligible to Philadelphia Residents who own their own properties and use them as their primary domicile.   You can rent out part of your home and still claim the Homestead Exemption, but not all of it.   Your Homestead Exemption is reduced proportionally by the amount of the house you actually use as your primary residence.  The part which you use as income is still subject to full taxation.

This is a fraud which can easily be thwarted if L&I sent copies of rental license applications it’s granting over to the Office of Property Assessment.   This can be done on paper or sent over as an electronic list.   A simple change to the Homestead Exemption law should allow the Office of Property Assessment to automatically delete a Homestead Exemption whenever a new rental license is filed where the applicant tries to claim the full $30,000 exemption.

This is a computer fix that literally takes a couple of hours.

Can City Council do it?

Multiple rows of filing cabinets in an office or medical establishment, overflowing with files. Narrow depth of field to emphasize the "neverending" feeling

A very few of you haven’t yet received a notice from the City’s Office of Property Assessment informing you of some changes made to your assessment on your property.   Most of you already have.  Philadelphia is comprised of 578,000 property lots and notices are going out to owners of 475,000 of them.

If you look at the notice carefully, you’ll observe that your total assessment likely did not change but a lot of the value of your property has been shifted over to the Land Assessment.   Improvements (which are buildings) were decreased to compensate for the shift to land.

Here’s the explanation OPA gave during testimony in front of City Council during budget season:

This year, OPA is seeking to improve the level of accuracy and uniformity of the assessment of the land component of the City of Philadelphia’s over 470,000 residential parcels, and on the 40,000 non-commercial/industrial vacant land parcels. OPA’s modeling unit, with the assistance of experts from the City’s Land Bank as well as a nationally respected modeling consultant have, at the neighborhood level, closely examined the relationship of the land component of each parcel to existing market values with regard to the land’s contributory value. Where appropriate, OPA has adjusted the land to improvement ratio in a manner that is more reflective of what the market indicates it should be, and in some cases revised the overall market value of the parcel itself.

Approximately 475,000 Change of Assessment notices will be mailed within the next week to taxpayers who may see a change in the overall assessed value or (for partially abated properties) a change in the taxable assessed value, or (in most instances) simply a change in the land-to-improvement allocation that results in no change in the taxable assessment. OPA will continue to allow property owners seeking to challenge a reassessment to file an informal appeal, or First Level Review directly with the Office of Property Assessment within 30 days of the Change of Assessment notice date.

Many critics of our City’s real estate assessment system have noted that land values are in actuality higher than what the City assesses them to be.   This is important for a few reasons:

  • Empty lots sell for more, usually way more, than what the City assesses an empty lot to be
  • We’re not taxing vacant lots as much as we should have
  • When comparing a house in original condition vs. new construction, it makes no sense to draw a market comparison between two completely different houses where the ONLY thing that makes them comparable is the land they sit on

This is bad news to some of you investment-squatters who snap up and cling on to empty lots just outside gentrification zones or deep inside redeveloping areas.  The City is finally taking its first steps at correcting that error and if you don’t pay tax on the higher land assessments you will be looking forward to more aggressive tax collection and Sheriff Sale efforts.

Did the City forget to reassess a property near you?   You can let the OPA know about it by searching the property here and then clicking on this button on the City’s website:

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You can rat out as many properties as you like.

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