Article written by:
Jeffrey Monsman, JD
Senior Manager, State & Local Tax Services
December is always a hectic month for businesses as budgets are finalized, forecasts are adjusted, year-end tax planning is completed, and maybe even a few vacation days are squeezed in. During this busy period, one area of tax planning that is often overlooked is the management of real estate valuation and the associated property tax. Businesses often receive tax bills, accrue the tax and move on without giving a second thought as to the accuracy of the value or the underlying tax.
Property tax in Ohio is such an overlooked area since there is not a formal return filed, and all valuation is performed by the county. Ohio law requires counties to reappraise all parcels on a six-year cycle and update the values in the third year of the cycle. Because the county essentially determines the value of all parcels with limited initial input from the property owners, Ohio has established an appeal process available for taxpayers who disagree with the value established by the county. Each three-year cycle opens a new appeal period afforded to all property owners who disagree with the county value.
Tax year 2020 (payable 2021) is especially significant as nearly half of Ohio’s counties (including many in central Ohio) are undergoing revaluation as part of the three-year cycle. This means that the value established for tax year 2020 will remain in place for the next three years absent significant changes to the property (such as an addition or demolition). Any valuation reduction achieved as a result of an appeal would have a direct impact on the property tax bill.
For counties undergoing revaluation, tentative values were issued in late summer/early fall, and the general consensus was an increase in the value of approximately 10% – 20% depending on the county. Once final values are certified and approved by the state, taxpayers will begin receiving tax bills in early January, at which time the formal appeal process will open.
Before deciding to pursue an appeal, taxpayers should evaluate their real estate holdings and estimate the value through any available data (which may include recent sales data, appraisals, and the valuation of similarly situated neighboring properties) to determine if the property is, in fact, overvalued. In addition, any potential tax savings should be considered along with the costs of pursuing an appeal and the potential risk of a valuation increase. In order to be successful in a real estate valuation appeal, taxpayers will need to provide the county with some type of evidence to prove that the value established by the county is incorrect. Items such as recent sales documentation or a professional appraisal of the subject property are items that may suffice as evidence in a valuation appeal.
The deadline to file an appeal to challenge a real estate valuation is March 31, 2021.
If you think your property may be overvalued, please contact GBQ to discuss the appeal process in greater detail.