Ohio’s latest property tax reform effort, Ohio House Bill 126, made it through the Senate this week and is now headed back to the House for a concurrence vote on Senate changes. As passed by the Senate, H.B. 126 would eliminate the contentious practice of school districts initiating property tax complaints with county Boards of Revision to increase property values.
Specifically, the bill would prohibit any person or political subdivision from filing a property tax complaint with respect to property that the person or political subdivision does not own. School districts would be allowed to file counter-complaints only if the school board adopts a resolution authorizing the action. Also, school districts would be barred from appealing Board of Revision decisions. Finally, school districts and property owners are prohibited from entering into a private payment agreement where the owner pays the school districts to dismiss, not file, or settle a counter-complaint.
Ohio Property Tax in General
Ohio real estate taxes (also known as ad valorem taxes) are administered by counties with oversight by the Ohio Department of Taxation. Pursuant to state law and Ohio Department of Taxation rules, county auditors or fiscal officers must conduct a full reappraisal of real property every six years and update values in the third year after those reappraisals. The Department’s Division of Tax Equalization compares the assessed values of properties to sale prices, then uses these “sales ratios” to evaluate assessments and, if necessary, seek changes. Many counties in Ohio have recently completed their reappraisals or updates and their tax rolls are in the process of being certified by Ohio Department of Taxation. As Ohio property taxes are billed a year in the arrears, property tax complaints may be filed from January 1 to March 31 each year for the preceding tax year.
School District Complaints
Outside of the countywide reappraisal and update process, many school districts currently employ attorneys to routinely file property value increase complaints based on conveyance fee statements for property transactions, recorded mortgages or other factors. Despite the use of “sales ratios” in evaluating assessments, a successful challenge to value based on comparative fairness – also known as uniformity – has not been successfully litigated in Ohio. The school district practice of chasing sales prices and filing increase complaints can seem unfriendly to recent purchasers, particularly where there is a significant difference between sale price and the auditor’s market value.
As property taxes in many jurisdictions can exceed three percent (3%) of market value in Ohio, it is imperative that property owners maintain awareness of their property tax assessments to protect their rights and ensure that values are correct, and taxes are fair. A recent sale price of a property is emphasized for assessment purposes, generally subject to a two-year recency limitation. However, a fee simple appraisal may be used to rebut the sale price value presumption in certain circumstances. Aside from property owners, commercial or industrial tenants may also pursue property tax appeals if certain requirements are met. First, tenants must be obligated to pay the entire amount of real property taxes pursuant to a lease. Next, tenants must have specific authority provided by the landlord to file complaints or counterclaims.