Overview of Real Estate Tax
Real property owners received their real estate tax bills this past December and January. Now is the time to evaluate whether your property is appropriately valued. Ohio real estate taxes are imposed based on the fair market value of the real estate. Even if you have already paid the first half or all of the 2015 tax year tax liability, the tax can be recovered if it was paid on an overvalued property.
Ohio law requires that county auditors re-appraise real estate every six years for purposes of calculating the value of the property that will be used for computing the real estate taxes. The appraised values are also updated every three years, generally through the use of a computer-based system. Because real estate values are constantly fluctuating, the county auditor’s valuations may not accurately reflect the true value of your property for a variety of reasons. Furthermore, different regions of Ohio are experiencing different trends in real estate values.
Deadline is March 31, 2016
The deadline for filing formal complaints with the county auditor is March 31st of the year following the tax year whose value is being contested. For example, tax year 2015 complaints may be filed between January 1, 2016 and March 31, 2016.
Process of the Appeal
Pursuing an appeal of your real estate taxes can be daunting and is fraught with risk--it is usually worthwhile to retain a professional with experience with navigating such appeals. The key is to first determine whether an appeal makes economic sense. Below is an outline of our approach to real estate tax appeals.
1. Review the valuation that the county auditor has assigned to your property.
“Market Value” is the value that the auditor alleges that your property is worth (generally, what a typically motivated buyer and seller would agree is the fair market value or the value that it would sell for in the open market).
If the county’s value is higher than the price at which you believe the property would sell in the open-market, an appeal may be advisable.
“Taxable Value” is 35% of the value that the auditor alleges is the “market value.”
The “Effective Tax Rate” that you may see on the tax bill is somewhat complex because the starting point tax rate is first reduced by deductions (H.B. 920 tax reduction factors tax rollbacks, etc.) and then is applied against the “Taxable value” described above.
2. File the Appeal: After reviewing the pros and cons of filing the complaint, the owner’s attorney may file a complaint with the auditor not later than the deadline of March 31, 2016.
3. BOR Hearing Scheduled: The Board of Revision assigns a hearing date at which time the owner is permitted to present evidence of the fair market value of the property. However, the school district in which the property is located may file a counter-complaint alleging a different fair market value.
4. Prepare for Hearing: The taxpayer gathers information about the property’s fair market value (sale price of the subject property, an appraisal, rent rates for comparable property, etc.).
5. Attend BOR Hearing: At the Board of Rev ision hearing, the owner, his or her attorney, and expert witnesses regarding the fair market value appear to request a reduction in the taxable value of the property.
When weighing the benefit of an appeal, taxpayers must realize that a favorable decision will impact more than merely the current year taxes. Potentially, a successful appeal could reduce real estate taxes for several years, depending on the cycle of revaluation for the particular county in Ohio.
Between now and March 31, 2016 consider whether to protest your real estate tax valuation. Our attorneys have practiced in Boards of Revision in all regions of Ohio and have litigated real estate tax valuation cases at the Ohio Board of Tax Appeals. If you have questions about this Alert or your ability to protest your real estate taxes, please contact any member of the team at Zaino Hall & Farrin LLC.
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