Philadelphia Construction Tax Alert
Philadelphia City Council President Darrell Clarke introduced a bill yesterday that would levy a new tax on any (1) new construction of; or (2) improvement to any existing residential, commercial or industrial building in the City at a rate of $1.00 per $100 of “improvement” costs. For purposes of the bill, “improvements” means: any repair, constructions or reconstructions, including additions or alterations, which rehabilitates a structure so it becomes habitable or attains a higher degree of housing safety, health or amenity or is brought into compliance with Philadelphia laws and regulations.
The bill exempts from the tax any improvements that are not eligible for an abatement under Philadelphia’s existing real estate tax exemption law, or improvements that already are exempt from real estate taxes under the KOZ, KOEZ, and KOIZ laws. Turn-overs of apartment units also are exempt.
Half of the tax will be due at the time of building permit application and the other half will be due prior to the issuance of the certificate of final inspection.
The Council President’s bill has been strategically timed with the introduction of another bill that grants the full 100% abatement from real estate taxes to any project that submits an application for exemption before December 31, 2023, instead of current December 31, 2020 deadline. As the law stands, any application made after December 31, 2020, would receive only a 50% reduction in the real estate taxes over 10 years, instead of the full 100%.
The Real Estate Team at Obermayer will continue to track the progress of both bills and provide updates to help you make you make better business decisions. Please feel free to reach out to anyone on the team with questions about this, or any other City or suburban real estate matter.
This alert is intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have. We are fully operational during this pandemic and stand ready to assist as you navigate this ongoing and developing COVID-19 situation.