Philadelphia Tax Abatement Question

[Peter Zoltowski]

Four years ago I purchased a property in the Kensington neighborhood of Philadelphia for $20,000. The home had been well maintained but was (and still is) in a rough area. In my spare time I’ve removed dated wallpaper, demolished some non-load-bearing walls, exposed some brick and completed a few other projects that will add sweat equity. Up to this point I haven’t hired any contractors or put any significant amount of money into updating the property. Signs of gentrification near my house are just starting to show. Several vacant lots a few blocks away are now being developed into trendy houses with rooftop decks. The current tax valuation is $8,000 for the land and $30,000 for the structure which equates to an annual real estate tax bill of about $530. I think it will be several years or more before the neighborhood might improve enough that I would want to live there but in the mean time I’d like to start hiring contractors to begin some of the essential projects like re-wiring the second floor which has knob and tube. Other neighborhoods in the City have transformed in similar ways and it seems like there is a trend whereby a few years after a neighborhood starts to become safe and desirable, the City will drastically increase the property assessments. My question is about Philadelphia’s 10 year property tax abatement. I typically think of the abatements as being most common when a developer buys a vacant lot and builds a high end duplex on the land or when a flipper buys a shell property and makes it look pretty but I know the abatements are available to almost anyone who gets a building permit. The thought dawned on me a few days ago that if I were to hire contractors to replace the wiring, replace the roof, construct a new bathroom, etc. that I might qualify for a 10 year abatement which would allow me to theoretically lock in the $30,000 assessment on the structure for the next decade. I understand that the assessed value of the land could still change. Has anyone had any experiences like my situation where the structure already exists and is in pretty decent shape but does require some work that would require pulling a building permit? Were you successful in locking in the assessed value even thought the neighborhood improved significantly and the other properties nearby saw a large increase in their tax bill? Is there something important I haven’t taken into consideration? I appreciate your insights!