In the year 2000, as a way to encourage new construction and the rehabilitation of distressed homes, the city enacted a tax abatement. This program, which is a repurposing of a local agreement that first took effect in the 70’s, allows homeowners to delay paying property taxes on any new construction or major improvements to their property for 10 years.
It was put in place with the greater goal being to grow the economy, create new jobs, and expand the city’s tax base. Despite the blindsiding crash in 08’, reports do show that expired abatements are adding $48.1 million in tax revenue annually, and that the number should go up to $169.4 million year after year by 2026. That is, if the value of these abated homes either hold or rise in the coming years.
Over the short-term, these abatements are reducing tax revenue that is taking away from our city’s underfunded public school system. Philly’s economy in 2000 was much slower and more stagnant than the current steadily booming housing market, so opposers of the program ask whether the potential long-term benefits of this enactment outweigh the definite short-term costs.
Either way, as a result of the divided support and criticism of the initiative, the future of the abatement is uncertain, but thus far it has continued to remain in place. Nevertheless, as a resource available to all residents, this is something that you will want to continue to keep an eye on, whether you are a first-time homebuyer or a seasoned developer.