Stephen K. Hall, JD, LLM – Member
Ohio Real Estate Tax - Potential Savings based on COVID-19 Impact
Is your Ohio Real Estate Tax liability going up or down?
The Ohio real estate tax system, even in a typical year, presents timing and economic dilemmas for owners, largely because the value of the real estate is measured as of the first day of the tax year, yet the liability is not due until the following calendar year. Accordingly, because of the 12-month lag, owners may find themselves in a different economic environment when the tax is due, as compared to when the amount of the tax was derived. Our attorneys have significant experience in challenging real estate taxes in all parts of Ohio, and this year presents unique issues for deciding whether to initiate a tax challenge, and how to defend it.
Covid-19 and State of Emergency impact?
The impact of COVID-19 and the State of Emergency in Ohio has made the real estate tax system even more complicated for Tax Year 2020, and presents more questions for owners, especially those owners who can prove that the value of their real estate declined after the January 1, 2020 “lien date” based on the impact of COVID-19 and the State of Emergency.
In proposed legislation (as of the writing of this, it has not passed into law), a new law in Ohio could permit certain owners to prove the value of their real estate as of October 1, 2020 (which was after the impact of COVID-19 hit the U.S. real estate market), thereby allowing for possible adjustments to the value of the real estate for Tax Year 2020. The concept of the legislation is to protect certain types of property that were doing much better on January 1, 2020, than on October 1, due to COVID-19 and related limitations that occurred between January 1 and October 1, 2020. The legislation currently proposed is in H.B. 133 of the 134th General Assembly.
What is the Deadline to Challenge the Tax Year 2020 value?
The deadline to challenge the Auditor’s tax value for Tax Year 2020, by filing a valuation complaint, is March 31, 2021. However, if the proposed Ohio legislation passes, it is possible that there may be a second “extended” due date to file a Tax Year 2020 complaint, which, based on the current version of the proposed legislation, would be within 30 days after that legislation becomes effective. If the legislation is not passed by March 31, 2021, the owners should consider filing a complaint not later than March 31 and review the details of the proposed legislation as though the rules contained therein might become the law after March 31.
What Owners Should Do
Owners should consider whether their real estate might be overvalued as of January 1, 2020, whether or not the owner might wish to use the proposed legislation to look at economic conditions as of October 1, 2020, instead of January 1, 2020.
Because the proposed legislation might not be passed at all, let alone by March 31, owners should carefully consider their options under two possible scenarios, one without the legislation passing, and one with it passing.
The proposed legislation currently states, for those that wish to use the October 1 valuation date:
An eligible person that files such a valuation complaint shall allege with particularity in the complaint how [the COVID-19 pandemic or a state COVID-19 order] *** caused the reduction in true value of the property.
The board of revision shall dismiss a valuation complaint that merely alleges a general decline in economic or market conditions in the area or region in which the property *** is located.
Notwithstanding division (A)(2) of section 5715.19 of the Revised Code, an eligible person may file a valuation complaint authorized under [the new provision regarding October 1, described above] ***, regardless of whether that eligible person filed a complaint under section 5715.19 of the Revised Code relative to that parcel for any preceding tax year in the same interim period.
This third element addresses the general rule that an owner may only file one complaint per tax valuation cycle triennium unless an exception applies.
Unique aspects of Ohio real estate tax law - challenges by school districts
Some public entities (generally school districts) that receive much of the real estate tax paid by property owners also have the right to protest the value, generally to attempt to increase a property owner’s real estate tax liability. School districts also may file counter complaints against an owner’s decrease complaint, seeking to retain the Auditor’s value, or even increase the value. This ability for public entities to become a party to the litigation is very unique, and we are not aware of any other state that allows for such broad involvement by a public entity to be adverse to both the owner and to the county officials who set the tax value (Auditor or Board of Revision).
Practical thoughts for any Tax Year challenge, not merely Tax Year 2020
Some practical points to consider include:
If the value seems overstated, you may wish to file a complaint and hire an appraiser to assist in valuing the real estate as of a particular lien date.
Generally, obtaining an appraisal can be useful in attempting to establish the fair market value.
Remember that some public entities also have the right to protest the value, generally to attempt to increase a property owner’s real estate tax liability. The school districts may also file counter-complaints against an owner’s decrease complaint, seeking to retain the Auditor’s value, or even increase the value.
Why Zaino Hall & Farrin?
Our attorneys have experience in assisting owners with real estate tax reductions. If you would like to discuss whether filing an appeal makes sense for your property or if you have questions about the valuation process or the challenge of tax values, please contact Steve Hall or any of our attorneys.