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Ep. 23: Understanding Ohio Property Taxes
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Understanding Property Taxes in Ohio: Values, Appeals & More
Get ready to unravel the complex world of property taxes in Ohio with Attorney Ted Gudorf. This episode will leave you better informed and prepared for the ever-changing property tax landscape. Ted walks us through the recent surge in property values, breaking down what this means for you as a property owner, and how it differs from your home's resale value.
Our host dives into the intricate details of the mass appraisal system employed by local counties and the independent appraisal process which determines a property's fair market value. Ted offers invaluable insights into how to appeal your property's value, the overall impact of property taxes on local school districts, and potential changes looming in property tax laws. All this and more in this episode of Repair The Roof!
Key Topics:
Tax Value and Fair Market Value (02:24)
Mass Appraisal (04:34)
Appealing an Appraisal (06:28)
Real Estate Tax in the State of Ohio (08:46)
Funding School Districts (11:23)
Challenges to Property Tax (13:18)
Wrap-Up (17:15)
How Property Values Are Determined for Taxes
In Ohio, each county has an auditor that is responsible for determining property values for tax purposes. This process of valuation is called a mass appraisal. The goal of a mass appraisal is to assign every parcel of property a tax value every 3-6 years. This allows the county to distribute the property tax burden across all land owners.
It's important to understand the key difference between a mass appraisal and a standard appraisal you may get when selling your home. Mass appraisals are not trying to identify the absolute highest value that a property could sell for at a given time.
Instead, their goal is to evaluate the relative value of homes in an area to establish fair taxation values.
As a result, mass appraisal values tend to be lower than true market values. Here is how the mass appraisal process works in Ohio:
- An appraisal company will be contracted to handle the county's mass appraisal.
- Appraisers physically assess each property once every 6 years. This involves taking measurements, photos, and notes on the land and improvements.
- In the interim 3 years between physical appraisals, drive-by reviews are conducted. Values are adjusted based on recent comparable property sales.
- Property owners are notified by mail of their new valuation each year by the county auditor.
- There are opportunities to appeal the value if you believe there are errors. More on the appeal process later.
Whenever a full reappraisal is conducted, many property owners are surprised to find their tax value increasing substantially more than the standard 3% per year. A jump of 10-15% in a single reappraisal year is not uncommon.
How Millage Rates and Taxes are Calculated
Once the mass appraisal establishes the county auditor's valuation of your property, your property taxes owed are calculated based on millage rates.
One mill equals $1 for every $1,000 of taxable value. But it's important to note that in Ohio, the taxable value used to calculate taxes is not the full auditor's assessed value.
Instead, property taxes are based on just 35% of the auditor's full valuation.
For example, if your home is valued by the auditor at $100,000, your taxable value would be $35,000. At a millage rate of 1 mill, you would owe $35 in property taxes ($1 for every $1,000 of the taxable value).
Local jurisdictions like school districts, counties, cities, townships, and others can place property tax levies on the ballot for residents to vote on. Most levies are proposed to collect a fixed dollar amount, so as property values rise the millage rate is adjusted downwards to prevent collecting additional revenue.
In Ohio, the vast majority of all property taxes (about 60% statewide) go to fund local school districts. This reliance on property taxes vs. other sources like income tax is currently being debated in Ohio politics. More on this later.
How to Appeal Your Property Value
If you believe your property has been overvalued by the county auditor for tax purposes, you have the right to appeal and try to reduce your valuation. This can lead to lowering your millage rate and saving substantially on property taxes.
Here is the process to appeal your home's valuation in Ohio:
- You must file a written appeal with your county auditor by March 31 each year.
- Your appeal will be heard by the county Board of Revision at an informal hearing.
- You must provide concrete evidence like photos, appraisals, comparable sales, etc. demonstrating that your home is overvalued.
- If the error is obvious and documented, the board may reduce your home's valuation for tax purposes.
For example, you may provide photos clearly showing an incorrect fact in your appraisal, like a supposed structure that doesn't actually exist on your land. Appraisals you've had done recently for refinancing can also be strong evidence.
The key is having irrefutable proof that the auditor's valuation is wrong. Hearsay or unsubstantiated claims are unlikely to prevail. If the evidence is convincing, the Board of Revision can order your property value reduced.
One important caveat is that you cannot appeal retroactively in Ohio. Your appeal must be filed by March 31 of the current tax year, and you can only challenge that year's valuation.
Other Important Property Tax Issues in Ohio
A few other notable points and trends related to Ohio property taxes:
- There is proposed legislation that would change how values are determined, such as using a 3-year average valuation rather than the triennial county appraisals. This could help smooth out large value jumps in reappraisal years.
- With Ohio income tax cuts recently enacted, property taxes may rise to compensate for the reduced revenue. Critics argue this disproportionately burdens middle and lower class homeowners.
- High property taxes can lead to foreclosure. Ohio has seen a notable increase in tax foreclosures over the last 5 years, especially in cities like Dayton.
- In addition to homeowners, commercial and investment properties face substantial tax burdens in Ohio. Their values and tax bills can also be appealed.
- Non-school jurisdictions like counties, cities, and townships are limited to collecting 10 mills or less in property taxes without voter approval. Additional levies must go on the ballot.
- Only voters that live within a given jurisdiction get to vote on that jurisdiction's levies. Sotaxes target the direct beneficiaries.
- There is debate around whether school districts should have standing to challenge property valuations. Currently they can participate in appeals, to the dismay of some homeowners.
Finding Help with Property Tax Issues
As seen above, navigating Ohio's property tax code can be confusing for homeowners and businesses alike. If you need help filing an appeal to reduce your taxes, or strategizing how handle a sharply higher tax bill, consider connecting with a local property tax attorney.
An experienced property tax lawyer can review your situation, advise you on the strongest appeal arguments, and represent your case for a lower valuation before the Board of Revision.
With some expert guidance, you may be able to substantially reduce your property tax burden. But time is of the essence, as appeals must be completed by March 31 each year.
Don't hesitate to get started on an appeal today if you think your property valuation is wrong. A successful appeal could save you thousands of dollars annually in lower property taxes.
Resources:
- Gudorf Law Group
- The Ohio Estate Planning Guide - Free Book
- Gudorf Law: What We Do and How We Help Webinar
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