Executive Summary
Why the Controller’s Office Conducted the Investigation
The Office of the City Controller (Controller’s Office) conducted an investigation into the legitimacy of property owners claiming the Homestead Exemption. The Controller’s Office Special Investigation Unit (SIU) initiated the investigation after this issue was raised by City Councilmembers and in response to an inquiry from a Philadelphia resident who identified properties they believed were improperly receiving the homestead exemption.
It is crucial that the city prevent ineligible property owners from claiming the homestead exemption, as it reduces real estate tax revenue essential for funding the School District of Philadelphia and vital city services.
What the Controller’s Office Found
The Controller’s Office SIU identified the following significant findings:
- Homeowners are improperly receiving multiple homestead exemptions
- Homeowners living outside the city are improperly receiving the homestead exemption
- Business entities and rental property owners are improperly receiving the homestead exemption
In total, the Controller’s Office estimates that illegitimate homestead exemptions could cost the City and School District of Philadelphia $11.4 million annually and $57 million over the next five years if improper receipt of the homestead exemption is not addressed.
What the Controller’s Office Recommends
The City Controller’s Office has developed the following recommendations to address the findings noted above and in the body of the report. These include:
- Strengthen the verification process for property ownership and ensure each property owner only claims one homestead exemption.
- Cross-check mailing addresses by using city databases to flag properties with identical or similar owner names and the same mailing address for multiple exemptions.
- Conduct reviews for properties with homestead exemptions where owners reside outside Philadelphia to confirm eligibility.
- Improve data accuracy by requiring standardized name formats for property records to prevent duplicate exemptions under slightly varied names.
- Consider enforcing penalties for improper exemptions and recoup lost tax revenue.
