Homestead/Farmstead Exclusion (Act 50)
Understanding the Homestead and Farmstead Exclusions
In November of 1997, Pennsylvania voters approved a change in the Commonwealth constitution to allow a method of real property tax relief, called a homestead exclusion, to be implemented in Pennsylvania. A homestead exclusion provides real property (also known as "real estate" or "property") tax relief to homeowners. It allows certain properties, such as a home, to receive preferential treatment under the real property tax, reducing the owner's taxes. The November vote changed the constitution to permit the General Assembly to pass legislation implementing the homestead exclusion.
Passage of the Homestead Property Exclusion Program Act in May, 1998 (Act 50 of 1998),(Act 50 was amended 10/30/2000 - see below for amendment), provided implementing language and rules for how the homestead exclusion can be used in your school district, county, and municipality (township, borough, or city). Homestead exclusions and a similar exclusion for farm properties, called the farmstead exclusion, now can be made by school districts, counties, townships, boroughs, and cities.
Under Act 50 of 1998, a taxing jurisdiction (school district, county, or municipality) can implement homestead and farmstead exclusions without any change to the existing local tax structure, as long as the jurisdiction can pay for them without increasing real property taxes. The law also provides a mechanism for school districts to change their local tax structure by relying more upon an earned income tax, and in exchange reducing the real property tax and eliminating several nuisance taxes (the per capita, occupation, and occupational privilege taxes). School districts making this change are required to use the homestead and farmstead exclusions to make these real property tax reductions.
This bulletin was developed to help you understand the homestead and farmstead exclusions, what they do, how they can be implemented in your community, and how you would apply to receive the exclusions for your own property. Because the homestead and farmstead exclusions are not necessarily tied directly to the school tax changes in Act 50 of 1998, this leaflet does not attempt to address local tax reform issues, except where they may relate to the exclusions.
Amendment to Act 50
Signed by Governor Ridge on Oct 30, 2000
SECTION 3. THE ACT IS AMENDED BY ADDING A SECTION TO READ:
SECTION 1975. HOMESTEAD PROPERTY EXCLUSION PROCEDURE.-- (A) THE PROVISIONS OF 53 PA.C.S. § 8584 (RELATING TO ADMINISTRATION AND PROCEDURE) SHALL NOT APPLY TO A COUNTY OF THE SECOND CLASS, OR A POLITICAL SUBDIVISION OF A COUNTY OF THE SECOND CLASS, THAT IMPLEMENTS AN EXCLUSION AUTHORIZED UNDER 53 PA.C.S. CH. 85 SUBCH. F (RELATING TO HOMESTEAD PROPERTY EXCLUSION). IN LIEU OF THE PROVISIONS SET FORTH IN 53 PA.C.S. § 8584, A COUNTY OF THE SECOND CLASS THAT IMPLEMENTS AN EXCLUSION AUTHORIZED BY 53 PA.C.S. CH. 85 SUBCH. F SHALL ADOPT SUCH RULES, REGULATIONS AND PROCEDURES AS DEEMED NECESSARY AND REASONABLE FOR ITS USE OR THE USE OF THE POLITICAL SUBDIVISIONS SITUATE THEREIN TO ADMINISTER THIS PROGRAM OF EXCLUSIONS.