Category Archives: Commercial Real Estate

Next week, Christopher Finney will present “Reducing your property taxes” in two forums:

1) The consistently ground-breaking Empower-U lecture series will host Christopher Finney at Connections Christian Church, 7421 East Galbraith Road, on Tuesday, February 24, from 7 to 8:30 PM.  You can register and read about all of their course offerings for the Spring here.

2) Cincinnati Realtor Ellie Kowalchik and Summit Funding’s Aaron Denton team up for an informative evening on Thursday, February 26, from 6:30 to 8 PM at the Oasis Conference Center, Loveland, Ohio.  You may RSVP by emailing Ellie at [email protected] by February 18th.

All are invited to each of these courses.  We look forward to seeing you there!

The Ohio legislature has provided for significantly reduced property tax valuation (and thus, reduced property taxes) for property used for qualifying agricultural purposes.  This is referred to in the Ohio Revised Code as “Current Agricultural Use Valuation” and is shorted as “CAUV.”  This reduction is embodied at O.R.C Section 5713.31.

However, when the owner of property subject to such reduced valuation changes its use from a qualified agricultural use, Ohio Revised Code Sections 5713.34 and .35 provide that the savings for the past three years are to be recouped.  This can be a whopping one-time tax bill!

Further,  the recoupment is a lien against the real estate retroactive to the first of the year in which the change of use occurs.  Thus, when a change of use occurs in conjunction with a transfer of real estate, the buyer and seller need to carefully allocate between themselves the amount of such CAUV recoupment.

Because the seller received the benefit of the reduction; but it is the buyer’s change of use that is causing the CAUV recoupment to become due, it is not always understood between the parties who should bear this expense.

A buyer will be “stuck” with this CAUV recoupment charge as a lien against his property.  It is prudent for parties, Realtors and attorneys to assure the issue is addressed between the parties in the contract and at the closing, to avoid an unpleasant and expensive post-closing surprise.

In NDHMD, Inc. v. Cuyahoga County Board of Revision, et al., 2015-Ohio-174, the Eighth District Court of Appeals reviewed the finding by the Cuyahoga County Common Pleas Court that the surplus land auction conducted by the Cuyahoga County Auditor constituted an arm’s length transaction.

In 2009, the County Treasurer foreclosed on a property for delinquent taxes. Two attempts at auction failed, resulting in the property being turned over to the state. In March, 2010, the County Auditor placed the property for sale as part of a surplus land auction. The auction was conducted on March 24. One week later (but prior to the filing of the executed deed) the winning bidder (at $1,500) filed a challenge to the property valuation with the Board of Revision.

At the Board of Revision, the value was reduced from $963,300 to $444,720. The owner appealed that decision to the Cuyahoga County Court of Common Pleas, which upheld the BOR decision. The owner then appealed to the Court of Appeals, which ruled that because the challenge to the BOR was filed prior to the recording of the deed, the owner did not have standing to bring the challenge and dismissed the complaint (returning the value back to $963,300).

During the same triennial, the owner filed a new challenge for tax year 2011. Having satisfied the jurisdictional requirement of recorded ownership, the owner now faced the statutory prohibition against bringing two challenges in the same triennial absent an exception (one of which is an intervening arm’s length sale).

The Auditor argued that the surplus auction sale is not an arm’s length transaction.

Relying on the Ohio Supreme Court ruling in Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion No.2014–Ohio–4723, the Cuyahoga Court of Appeals found that, while an auction sales price is presumably not a voluntary, arm’s length transaction, this presumption can be rebutted.

Supporting the finding that the transaction was arm’s length was the fact that the county auditor had not been compelled to auction the property; that two prior auctions had failed, resulting in the property being transferred to the state; that the auction had been advertised; and that there were multiple bidders.

The finding that the auction constituted an arm’s length transaction was crucial for two reasons in this case. First, because NDHMD had filed a prior challenge to the value of the property (that had been dismissed on jurisdictional grounds), the sale provided an opportunity to bring the challenge at all. Second, as an arm’s length transaction, under the applicable law (since amended) the County Auditor was required to use the sale price as the true value of the property.

The final result is that a property that the County Auditor had valued at $963,300.00 was given a new value of $1,500.00, at least for the remainder of that triennial (in the most recent triennial, 2012, the value was adjusted to $170,100).

Notwithstanding the results in this case, the Court was clear that the general presumption remains that an auction price is not the true value for tax purposes.

Have a question about the County Auditor and Board of Revision Valuation Process? Contact Anna Ausman at (513) 943-6651.

 

Since our firm assists property owners in reducing the taxes on their real property by challenging the valuation placed by the County Auditor on that property, we are frequently asked “is my property valuation too high?”  Indeed, we provide a free initial assessment of property valuation to ascertain if savings might be available through the Board of Revision process.

As a starting point, “tax valuation” should follow the simple formula of “what a willing buyer would pay a willing seller for the property.”  The Boards of Revision of Ohio largely follow the same rules marketplace participants follow: Valuation should reflect the actual value.

Two fallacies about valuation:

1)  Many owners think their property must be over-valued if they experienced a significant increase in valuation from the prior triennial.  This simply is not true.  It is entirely possible the property was — and still is — significantly under-valued.  Just because a property experienced a significant — or above market average — increase in valuation means nothing.  The new valuation is compared to current parker, not prior valuation.

2)  Many property owners want to compare their Auditor’s valuation to that of their neighbors’ property.  But this is a false comparison.  What the Auditor thinks your neighbor’s property is worth is simply not evidence of value before the Board of Revision.  Comparable sales in your neighborhood, or new construction data is appropriate evidence.

 

Property owners in Hamilton, Butler and Clermont Counties, as well as major metropolitan areas in Ohio Montgomery County (Dayton), Franklin County (Columbus) and Cuyahoga County (Cleveland) all have new Auditor’s valuations on their January 2015 tax bills.  (New values will be out in Warren County next January.)  In those counties, the County Auditor has just completed its triennial (every three years) valuation for each parcel in their jurisdiction.

The new valuations, effective as of January 1, 2014, may all be challenged in a proceeding before the County Board of Revision this year, even if you previously challenged that valuation.  One of the benefits of winning a tax reduction is that the savings is guaranteed to last for at least three years, and it may well endure much longer than that.

The attorneys of the Finney Law Firm have handled thousands of tax valuation appeals, some involving tens of millions of dollars of savings, over the past decade before more than half of the Boards of Revision throughout Ohio.

Please call Anna Ausman ([513] 943-6653) for a free initial evaluation of your property to ascertain if savings may be available to you.