Category Archives: Property Tax Valuation

There is a flurry of concern arising from the notices hitting mailboxes in Hamilton County from County Auditor Dusty Rhodes telling property owners of their new valuations for the 2021 tax bills. The notice shows the prior 2019 value (2020 tax bill) of your home or business property and your new 2020 valuation (2021 tax bill).

The valuation increases average 15%, but some property owners we are hearing from are seeking hikes more than 25% on specific properties.

Naturally, taxpayers are assuming that means their tax bill will in fact go up that same percentage. But that actually is not so, not at all. Let us explain:

• The simplistic formula for determining your tax bill is: Property tax = property valuation * tax rate for more than 15 tax levies. Then take the sum of each of those individual calculations. The sum of these individual levy calculations plus a “kicker” for something called “inside millage” for the City, Village or Township and the School District — less a host of credits and adjustments — equal your tax bill. (The inside millage is about 10% of your total tax rate.)
• Other than the inside millage, most (not all) of the levies generate a fixed, flat amount of income each year for the tax entity (for example, $10 million per year for a school operating levy or $15 million per year for a mental health levy). Saying it another way, total levy revenue for most levies does not rise or fall based on fluctuations in total valuations — it by law stays constant year after year.
  • On the other hand, that very small part of your tax bill that is inside millage does rise proportionately with your valuation.
• That annual fixed revenue amount from most levies is generated from the total of the valuations in that taxing jurisdiction, i.e., the sum of valuation of all properties (let’s call this the tax base) in the political and taxing jurisdiction in question (say, a school district).
• Thus, the rate for each individual levy is — in a simplified sense — the fixed annual sum generated from the tax divided by the tax base that changes from year to year, usually upward, but occasionally downward.
• What this means is that as the value of all properties in a taxing jurisdiction rise, the rate drops by the same ratio (except the inside millage and a few other exceptions).
• Therefore, if the average valuation increase in Hamilton County is 15%, then the tax rate on average should be dropping about 10-12%. Thus, the real increase in your actual taxes paid should only be around 3-5%.
• Now, two more cautions:
  • If your tax valuation went up more than the average for the political and taxing jurisdiction in question, your tax hike will be more than that 3-5%. So, if you were unfortunate enough to get one of those 25% hikes, your taxes will indeed go up another 10% or more.
  • The other factor that impacts the taxes that you pay is the tax rate, so if your school district or City had a property tax hike (because of COVID, there were a remarkably low number of levies on the ballot this fall), your taxes may rise as a result of the as well.
• As you can see from this blog entry, the calculation of your tax bill involves dozens if not hundreds of individual calculations. The bills are tremendously complicated. But these overarching principles do apply, and therefore most taxpayers will not see tax increases anywhere near the whopping valuation hikes they are seeing on these recent Auditor notices.

We hope that gives property owners some comfort that these preliminary notices do not reflect the actual hike in your taxes coming in January.

David Winter of Local 12 yesterday did a great piece on the recent spike in property values in Hamilton County and how to fight the increase in your property. Watch it and read it here.

County Auditors in Ohio are required by law to re-value every parcel of real estate in their County every three years. The cycles differ by county, but for Hamilton, Butler, Montgomery and Clermont Counties, the next revaluation comes out on the January 2021 tax bills.  This means that for those  counties (and certain others in Ohio), the value stated on every tax bill in the January 2021 tax bills should be new for almost every property owner. Dusty Rhodes, the Hamilton County Auditor has sent new valuation notices to each property owner, and those have been arriving this week. As a result, our phones are really starting to ring.

The Enquirer today reports that Hamilton County property values have spiked 15% from the 2018 values here.

Yesterday, we wrote this blog entry: All the info you need to know on property tax valuation issues in Ohio. Click for more information.

Finally, the Cincinnati Area Board of Realtors is hosting a free seminar featuring Christopher Finney and Hamilton County Auditor Dusty Rhodes on the property tax valuation reduction process. The public is invited to attend.  Click here to register to get a link for that seminar.

Contact Chris Finney (513.943.6655) or Casey Jones (513.943-5673) for more information on reducing your property taxes.

As part of our property valuation work, we have received calls from property owners in Ohio and Kentucky asking how the affects of COVID-19 will come into play in property valuation challenges brought this year.

Effective (or target) date of valuation challenge

As an initial matter it is important to know the valuation date at issue. In Ohio, the “tax lien date” is always one year in arrears, so a challenge that is brought this year is actually challenging the value of the property as of January 1, 2019. In Kentucky, the tax lien date is current, so a challenge filed this year is challenging the value as of January 1, 2020.

Timing of when to file a valuation challenge

Because the valuation is as a specific point in time, it is important to consider what was affecting value on that specific date. When hiring an appraiser for a BOR (Board of Revision) in Ohio, or PVA (Property Valuation Administrator) in Kentucky, the appraiser gives her opinion of value as of the tax lien date. So, for instance, if the overall market takes a tumble in March, that would typically not affect the value of a property two month’s earlier. But may suggest that the values were already heading downward in January.

Thus, a hotel or restaurant property owner contemplating a challenge in Kentucky based upon the drop in income due to the COVID-19 virus and the stay at home order, is unlikely to see much weight given to the effects of COVID-19. That said, comparable sales in the past few months (which may reflect the effect of COVID-19 on the real estate market may have some evidentiary weight worth presenting to the PVA.

A challenge next year may be more successful than this year in Kentucky.

For Ohio property owners, COVID-19 is less relevant this year. This is because, as discussed above, the relevant tax lien date is January 1, 2019. As with Kentucky challenges, comparable sales in the past few months can be used as evidence of the value as of January 1, 2019, although the BOR will likely give such sales less weight than sales closer to the tax lien date.

In Ohio, only one challenge per three-year cycle

In Ohio the county auditors revalue properties every three years (the “triennial”). For Hamilton and Clermont Counties 2019 is the last year of the triennial. A new triennial will start with the 1/1/2020 value determined later this year by the County Auditors. In Warren County, the last year of the triennial is 2020 – meaning that the Warren County Auditor will determine a new three year value as of 1/1/2021.  As a general rule, property owners may only file one challenge per triennial (R.C. 5715.19(A)(2)). So a cautious approach me be the better approach.

If you’ve already filed a challenge in Ohio, it is worth a shot to raise the issue of COVID-19, but as discussed above, it may fall on deaf ears. For Hamilton County property owners, the best bet may be to wait until 2022 to file for the value as of 1/1/2021. For Warren County property owners, a better approach may be to file next year challenging the value as of 1/1/2020 (this may be a futile effort), but you will be able to refile again in 2022.

Legislative change?

The Ohio legislature is working on multiple bills in rapid succession to stabilize the economy and prevent economic hardship to businesses and property owners.  Perhaps this will be one area where the inequity of January 1 versus April 1, 2020 property values will be addressed.

Thus, in light of the spate of COVID-19 relief acts, it would not be surprising to see the state legislatures act to provide property tax relief with a 4/1/20 or 5/1/20 effective or target date for 2021 valuation challenges.  We will keep an eye on the legislatures in Ohio and Kentucky and update our blog as we learn more.

Conclusion

Ultimately, property owners should temper their expectations that the BOR or PVA will recognize the effects of COVID-19 on property values in this year’s challenges.

Hopefully the financial effects of COVID-19 will not be long-lasting. But if they are, it may be a better basis for a valuation challenge in 2021 or even 2022 (for an effective date after the COVID crisis broke out).

Contact Christopher P. Finney  (513-943-6655) for assistance with your property valuation challenge.

The Treasury Department and Internal Revenue Service announced Friday that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

They also announced that taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax.

The IRS announcement is here. These are unquestionably remarkable times.

Who says you can’t teach an old dog new tricks?

In the past year, I got two new bar admissions, the D.C. District and Bankruptcy Court and the United States Tax Court.

I obtained the Tax Court admission to help a client avoid a small tax penalty due to his securities dealer mishandling his IRA account and reporting the monies in it as having been distributed, when no such thing happened.

We won without even having a hearing, so my record is 100% before the Federal Tax Court. If I never file anything there again, I might keep that perfect record!

In any event, I have another certificate for my wall. Thanks to Diane Finney for keeping me looking sharp!