The first deadline is fast approaching for home or farm owners
hoping to get school property tax relief under Act 1, also known as
the Tax Payer Relief Act.
March 1 is the deadline for home and farm owners to apply for a
potential tax break.
This deadline is the first of many required as part of the most
recent attempt by the State of Pennsylvania to shift the tax burden
from low-income and senior citizen homeowners to other sources of
revenue.
Part of the new tax plan is a method of determining which homes
or farms might be eligible for an “exclusion” or tax break.
Property owners are required to file for that exclusion by March
1 with forms available through the McKean County assessor’s office
or those that were sent to them by their respective school
districts.
However, many in McKean County have already applied for the
exclusion in the past few years as part of previous attempts at tax
reform. In this case, a new application does not need be filed,
officials said.
Each school district in Pennsylvania was required to send out
applications before Dec. 31, 2006, to all homeowners who have not
previously applied.
Some school districts sent their initial applications out in
2004, others 2005, and still others 2006 – meaning that a homeowner
could have already been approved for the tax break.
If a homeowner is not sure if he or she is registered, he or she
should contact the county assessor’s office.
Area school business managers agree that the McKean County
Assessors’ office has been very helpful to them and residents
asking questions and applying for the tax breaks.
Not all applicants are automatically approved and even if some
applications were previously approved, if circumstances regarding
that farm or home change, owners should re-apply.
To receive the homestead tax break, the homeowner must be living
at the residence he or she is applying for that break, according to
officials. Homestead properties do not include rental properties,
vacation homes, camps or other homes where the owner does not live
on a permanent basis.
Business managers from Seneca Highlands Intermediate Unit 9 met
with The Era to explain the provisions in this complex Act that
calls for a shift from property taxes to other sources. This shift
will be put before voters in a referendum in the May 15 primary
election.
Since the state Legislature approved this latest version of
property tax reform last year, tax study commissions have been
meeting in each of the state’s 501 school districts to consider
various options outlined in the plan.
In order for this homeowner tax break to work, school districts
have to increase either Earned Income Tax (EIT) or Personal Income
Tax (PIT) to offset any breaks passed on to homeowners.
The tax study commissions met to recommend to the school board
the type of tax to be increased and the amount.
The Bradford Area School District, for example, took the
recommendation of its tax study commission to go with a .5 percent
increase in EIT from their taxpayers. That .5 percent added to the
current EIT taken by the tax payers’ municipalities brings the
total to 1 percent.
Earned income tax comes only from those who work through the
year. Those who do not, including those who receive pensions or
social security as income, would not be charged this tax.
A pamphlet produced by the Penn State Cooperative Extension
Office Agricultural Sciences Department explains that even if a
homeowner saves on real property taxes, he or she could be paying
more in other taxes, or in the case of Bradford School District
taxes, their EIT.
The pamphlet also says that homeowners with low income, such as
retirees, may end up paying less. Those school districts that
decided to increase the EIT are actually allowing their low-income
or senior residents to benefit from the homestead tax break.
Just as homeowners can receive a tax break, farm owners can
receive one as well, as long as at least one farm owner lives on
the farm. Farmstead properties include those that have buildings
used for agricultural purposes such as housing for animals.
Steve Perry, business manager for the Kane Area School District,
provided an example Wednesday morning of what a person at an income
level of $40,000 can expect to see in homestead savings or
costs.
He stressed that the following numbers are based on current
approved homestead applications – in Kane’s School District, which
could change after the March 1 deadline when more homeowners turn
in their applications.
A person who is a homeowner at the $40,000 income level in Kane
would see a savings of $51 in their property taxes while a working
renter would see a cost of $200 in their income taxes.
According to BASD Business Manager Kathy Kelly, there are 28.95
percent of renters in the area.
Calculations will be more accurate – as well as the number of
those available for the credit – when the numbers are crunched
after a multitude of things take place. This includes the March 1
application deadline passing as well as a March 13 deadline for
districts to accept or deny their tax study commissions’
recommendations, and after a public hearing is held in each
district authorizing the referendum questions.
Each district is also required to advertise their intent to
adopt the resolution authorizing the referendum question which will
appear on the primary ballots May 15.
Area school districts ask that residents realize that the
question, which includes the potential amount of savings for those
homeowners that are able to receive a tax break, will change with
the amount of new applications approved.
The more applications approved, the lesser the savings
distributed to each homeowner based on the EIT amount, which is
fixed.
Officials also explain that the shift in taxes does not result
in a revenue to the school district.
