Procedure for Prorating Tax Bills Subject to Homestead Exemption

LLA Real Estate Committee - August 25, 2008

At a recent meeting of the Real Estate Committee of the Association, we discussed the appropriate procedure for proration of school real estate tax bills which reflect a homestead exemption. In giving a presentation to various people regarding such tax bills, Dottie White suggested that the bill should be prorated based upon the face amount of the bill without considering the reduced amount for homestead exemption. This would have the effect of requiring the seller to pay a smaller share of the tax, on the theory that it is only the seller who qualified for the homestead exemption. The buyer must qualify after purchasing the home.

While we respect Dottie and her opinion, the Real Estate Committee was unanimous in its conclusion that this is not an appropriate way to prorate the tax bill. Therefore, it is our suggestion that the standard practice in Lycoming County be to prorate bills based upon the tax actually to be paid at the face amount, taking into account any homestead exemption. The qualification of the new buyer for homestead exemption for the following year is usually simply a ministerial act of applying for the exemption. While there will be some situations where the new buyer does not qualify for a homestead exemption, we nevertheless believe that in all cases the proration should be based upon the taxes actually required to be paid, which does take into account the homestead exemption.

Fred A. Holland, Esquire, Chair – LLA Real Estate Committee

August 25, 2008