Hey there, this is Gordon Stein with the I Love Philly Homes Team at Compass Real Estate. I am a residential real estate broker and investor specializing in new construction sales in Philadelphia and the greater philly suburban areas.

As we approach the end of 2020, I wanted to make sure that you guys were informed of the upcoming changes to the 10 year tax abatement. The abatement originally established in the 1990's was put in place to encourage development in the city after decades of urban population loss. This has been a controversial issue for many years in a lot of gentrifying neighborhoods.

Lets start with what is a tax abatement and how it work. Any real property has a land value or existing value plus any improvements made or structures that exist on the land. In the case of new construction, the tax assessment is only made on the land and not the actual house, since that would be considered improvements made.

The new bill will phase out each individual abatement so that the tax break’s value will be 100% in the first year and scaled down 10% each subsequent year. It will go into effect at the beginning of 2021. Essentially this will half the value of the abatement over a 10 year period.

The bill does not touch anyone who currently has an approved abatement already in place, and does not effect commercial buildings or rehabs. This change will only apply to new single family residential construction.

If you have questions on how to apply for an abatement, the differences between a rehab abatement and new construction abatement, or any real estate related questions, please reach out! gordon.stein@compass.com | 267-570-3757