Within the next few weeks, property owners throughout Ohio will be receiving their property tax bills for tax year 2022 (payable in January 2023). Given the current economic conditions, a review of the tax obligations, whether for your home or investment property, is more important than ever.
Real property taxes in Ohio, referred to as ad valorem taxes, are levied against the property based upon the value assigned to the property by the county auditor/fiscal officer in which the property is located. In simple terms, the higher the county assessment, the greater the tax obligation, and vice versa. For example, a retail building in Solon valued at $2 million will receive a tax bill for $63,000 compared to a tax obligation of $48,000 if that same building was valued at $1.5 million. Likewise, a house in Moreland Hills valued at $1 million will owe $29,000 in property taxes compared to a tax bill of $22,000 if that same house was valued at $750,000. Therefore, a review of the value assigned to your property is critical.
Pursuant to Ohio law, the county auditors or fiscal officers, “from the best sources of information available,” are required to reappraise property values every six years and update those values every third year in between. Usually, a recent arm’s-length sale of the property affords the assessor with the best evidence of value, but this type of evidence is often not available. Therefore, assessors may rely upon market data and sales reports for residential properties, and income/expense data for commercial properties in deriving values.
The county assessors are faced with the difficult task of accurately assigning values to every parcel of real estate located within its jurisdiction. Unfortunately, the assessments are not always accurate. In the cases where the county overvalues a property, the financial impact can be devastating. For a commercial property owner, the increase in tax negatively impacts profit margins. For a homeowner, an excessive tax burden may adversely affect a living budget.
If you determine that the county has assigned an unreasonably high value on your property resulting in an unfair tax obligation, Ohio law affords the taxpayer with an opportunity to contest the assessment. To initiate the process, a formal written complaint must be filed with the county. The deadline to file the complaint is March 31, 2023. Once the complaint is filed, the local board of revision will schedule the complaint for a hearing at which time evidence supporting the lower value can be submitted. Typically, an independent appraisal is the best form of evidence.
Of importance, the Ohio Supreme Court has held in some circumstances that it is the unauthorized practice of law for a non-attorney to prepare and file a tax complaint. Therefore, prudence requires contacting an attorney prior to commencing the process.
Kip Danzinger is a partner and co-president of Sleggs, Danzinger & Gill Co. LPA in Cleveland.
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