By: James Maransky and Kevin Gillen
Updated: April 4, 2017
In 2000, Philadelphia implemented a bold program to spur investment in real estate, the 10-year tax abatement. It exempts the value of all improvements to real estate from taxation for 10 years.
The abatement has been credited with promoting needed new construction and improvements to Philadelphia’s housing stock. It has also been viewed as a windfall for developers and wealthy owners of million-dollar condominiums. Through our many engagements with community groups and public officials, the Building Industry Association of Philadelphia (BIA) identified several misconceptions about the abatement, as well as its continued necessity.
In order to lead a more informed discussion about the program, the BIA commissioned a study to analyze the most up-to-date data from the Philadelphia Office of Property Assessment, looking closely at the size, distribution, and fiscal impact of tax-abated properties. Seventeen years after the program was implemented, we hope the data will provide insight into its scope and economic impact.
Among the findings, the abatement:
Is widely used across Philadelphia’s neighborhoods. Since its implementation, nearly 20,000 properties have received abatements; 15,607 are active. The majority of these properties are located outside of Center City, and every neighborhood has some abated properties.
Benefits a wide range of homeowners across the income spectrum. The typical abated property is a single-family home with an assessed value between $200,000 and $300,000; 67 percent are assessed at $400,000 or less. Twenty-five percent meet the federal guidelines for “affordable” or “workforce” housing. Less than 3 percent of abated properties have a value exceeding $1 million.
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