Current through Register Vol. 54, No. 45, November 9, 2024
Section 401.56 - Property taxes or rent paid for part of property used as homestead(a) Where the dwelling constituting the claimant's home and the land surrounding it is in excess of that which is reasonably necessary for use of the dwelling as a home, the amount of property taxes or rent paid used in computing the claimant's rebate will be limited to the amount of property taxes or rent paid attributable to that amount of land which is reasonably necessary for use of the dwelling as a home.(b) Land which is "reasonably necessary for use of the dwelling as a home" includes land surrounding the home which is used for the following purposes: (3) Recreational area, which may include a swimming pool, putting green, tennis courts, stable and grazing area for horses or ponies used for recreational purposes by members of claimant's family.(4) Land on which fruit or vegetables are grown or livestock or fowl raised for personal consumption by claimant and claimant's family as opposed to being sold commercially or for a profit.(5) Land not to exceed a reasonable number of acres the sole purpose of which is to provide privacy to the homeowner and his family, as for example, a field or stand of trees between the residence and a roadway. However, land used for commercial farming or for any other commercial purpose is not reasonably necessary for the use of the dwelling as a home.(c) Whenever the parts of the land are not substantially of the same value, the ratio of the market value or assessed value of that land which is reasonably necessary for use of the dwelling as a home to the market value or assessed value of the entire parcel of land shall be used to determine the property taxes or rent paid on the land used for the homestead. Example 1. Claimant A owns 8 acres of land of which each acre is of substantially the same value. Two acres of land surrounding his house are reasonably necessary for use of the dwelling as a home. Property taxes are $240 for the eight acres of land and $200 for the dwelling. Property taxes for the land necessary for use of the dwelling as a home are 1/4 x $240 = $60. In addition, the property taxes on the dwelling ($200) will be included.
Example 2. Claimant B rents 30 acres of land. Five acres of land surrounding the house are reasonably necessary for use of the dwelling as a home. The other 25 acres are utilized as a commercial farm. The commercial farm accounts for 75% of the total market value of the 30 acres of land. Rent for the 30 acres and dwelling is $1,000 per year. Rent for the dwelling and land necessary for use of the dwelling as a home is 25% x $1,000 = $250.
(d) In the case of a multi-dwelling building, in which each unit is substantially of the same value, the property taxes or rent paid attributable to the unit used as the claimant's homestead may be determined on the basis of the proportion which the claimant's unit bears to the total number of units in the building. Example. Claimant J owns a three-story house which has been remodeled into three apartments of equal size. Claimant J rents out the upper two apartments and lives in the lower apartment. Property taxes for the entire building are $330. Property taxes on the land are $120. Property taxes on J's apartment are $110 (1/3 of $330). The taxes on that portion of the land attributable to J are $40 (1/3 of $120). The total amount of property taxes on J's homestead is, therefore, $150 ($110 + $40).
(e) In the case of a multi-dwelling building in which the value of each unit is not substantially the same, the property taxes or rent paid attributable to the claimant's home shall be determined by the proprotion which the market value or assessed value of claimant's home bears to the market value or assessed value of the building. Example. Claimant B owns a building. The front portion is used as a grocery store and there is a three-room apartment in the rear. B occupies the apartment. The assessed values of the grocery store and the apartment are $4,000 and $1,000, respectively. The property taxes on the entire building are $200. There is also a small yard in the rear of the building which is used jointly by B and the operator of the grocery store. The grocery store portion of the building is situated on 3/4 of the land on which the building stands. The property taxes on this land are $100. The property taxes on B's apartment are $40 (1/5 x $200). The property taxes on the land are $25 (1/4 x $100). Therefore, the total property taxes on B's homestead are $65.
(f) The inclusion of property taxes or rent paid as a business expense for income tax purposes precludes a claimant from using these payments as a basis for a property tax rebate or rent rebate in lieu of property taxes. Example. Claimant A's total property taxes on his home for the year 1973 are $250. A carries on a business in his home, and on his 1973 profit and loss statement for income tax purposes claims $200 as a tax expense of his business. Claimant A may only receive a property tax rebate on a maximum of $50.
This section cited in 61 Pa. Code § 401.22 (relating to limitations).