Berks County Common Level Ratio Continues to Rise

Berks County Common Level Ratio Continues to Rise
Posted By Jeffrey Hogue @ Jul 11th 2020 11:35am In: Real Estate

For the seventh consecutive year, the Common Level Ratio has increased in Berks County. What exactly is a "Common Level Ratio (CLR)," and how does it affect property taxes and property value.

It is easy to understand why any subject relating to property taxes is hard to swallow for many homeowners in the Reading and Berks area. All too often, any news associated with property taxes is not good. With that thought in mind, I am pleased to report that the Common Level Ratio in Berks County has increased for the seventh consecutive year! Once again, we can use the words "Increase" and "Taxes" in the same sentence, and it is a good thing.


Explaining the Common Level Ratio

Each year economists and mathematicians in Pennsylvania, otherwise known as the State Tax Equalization Board (STEB), gather to evaluate real estate market trends. Their goal is to come up with a fair assessment of property values to equalize property tax assessments. The board's findings lead to a calculation known as a "Common Level Ratio," which is applied individually to each county in the commonwealth.


You can check out the PA Department of Revenue and the State Tax Equalization Board (STEB) website for more information. Be warned; while doing so may give you an idea of how they calculate the Common Level Ratio, it could also provide a raging headache.


I will attempt to simplify the answer and save you the possible need for an aspirin. The CLR Factor is a number you divide a property's market value by to arrive at the taxable or assessed value.


Example: A property in Berks County has a market value of $100,000. The new CLR Factor for 2020-2021 is 1.78. We divide $100,000 by 1.78, which gives us an assessed value of $56,179. Last year the CLR Factor was 1.61, and the assessed value would have been $62,111, or almost 10% higher. When the property assessment goes down, you pay less in property tax, so a higher CLR Factor is good.


How is the CLR Factor Calculated

In 2018 Lancaster County completed a county-wide reassessment. That year their CLR Factor was 1. When a county undertakes the expensive and challenging task of reassessing property values, leveling is not necessary because all properties, new and old, are assessed simultaneously. In contrast, Berks County last performed a county-wide reassessment between 1993 and 1994. As previously stated, the new CLR Factor is 1.78, which is approximately 56% of market value. The theory is that a 44% adjustment was necessary to level the property tax playing field. We can assume that the board believes property values between a home valued in 1994 and one in 2020 differ by 44%.


To further clarify, as property values rise, the CLR factor goes up to balance the baseline property value set during the most recent county-wide reassessment.


Of Note - The property tax millage in the City of Lancaster was 46 in 2017. After the reassessment, it dropped to 35.


How to Benefit From the New Common Level Ratio

Lower property taxes mean higher property value. It is an interesting paradox that I will address in a future article. You may be able to take advantage of the higher CLR Factor by appealing your home's tax assessment. The appeal period in Berks is July 1 through August 15. Visit the Berks County Assessment Appeal Website for more information.


Before you rush out to appeal your property taxes, go to the link below to read an article I wrote on the subject in 2018 called "PA Common Level Ratio Change and Your Property Taxes." You can Google the title or go to my website at I believe you will find some helpful information there.


As I stated in the article two years ago, "It is always a good idea to speak with a knowledgeable Realtor before embarking on the assessment journey."


Think this Common Level ratio - property tax stuff is complicated - Me too. It would just be much easier if our legislators did away with the whole School Tax thing.


Knowledge is Power!

Jeffrey C. Hogue

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