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.

Attorney Christopher Finney is teaching “Reducing your property taxes in Ohio” on January¬†21 from 9 to noon before the Cincinnati Area Board of Realtors. ¬†Finney is joined in the presentation by Hamilton County Auditor Dusty Rhodes.

The two of them have annually taught this class to the Board of Realtors each of the last six years.

This piece from the Northland News summarizes the results of the Board of Revision work before the Franklin County (Columbus) Board of Revision this past year and a peek at 2015.    Two snippets:

  1. In 2011, a little more than half of the property owners seeking lower adjustments saw some movement toward the amount they considered to be an accurate value.
  2. During the 2014 triennial update, property values in central Ohio trended downward overall.

Our firm continues to practice in this area successfully.  If we can help you with a 2015 valuation, please call Anna Ausman at 943-6651.

It was one of the more unusual¬†chapters in our firm’s public interest law practice. ¬†Tuesday night in a vote before Maple Heights Council. that battle ended.

In July and August, a group of citizen volunteers in the small northeast Ohio City of Maple Heights followed the procedures set forth in the Ohio Constitution, gathering signatures of 10% of the electorate in that burb to place before the voters a Charter Amendment that would ban red light and speeding cameras.

The petitions met the complicated and exacting requirements of the Ohio Constitution and the Ohio Revised Code, and the additional requirements set forth in the Maple Heights Charter, for ballot access.  Indeed, they collected nearly twice the minimum number of signatures required.

Immediately upon turn-in of the petitions, the haughty City Law Director announced that the City would refuse to place the issue on the ballot. ¬†His reasoning? ¬†The matter is currently before the Ohio Supreme Court and the Ohio General Assembly, and¬†“they should decide,” not local voters.

Finney Law Firm attorneys wrote a taxpayer demand letter, a sort of warning letter: If you don’t act, we will sue. ¬†The Law Director continued to thumb his nose at the local taxpayers.

We took the matter to the Ohio Supreme Court in a Mandamus action. ¬†The Court accepted briefing. ¬†The City’s defense before the Court? ¬†Well, we never said we would not put the issue on the ballot, we just have not had adequate time to think about it just yet.

Within 24 hours of the conclusion of briefing, last Friday the Court issued the Mandamus and ordered the Council to follow the Constitution by voting “forthwith” to place the issue on the November ballot.

That vote finally occurred Tuesday night, and on Wednesday the Cuyahoga County Board of Elections certified the matter to the ballot as Issue 99.

Maple Heights voters will have a chance to ban Red Light and Speeding Cameras on the November 4 ballot.

In the past decade, businesses, particularly restaurant chains have been utilizing real estate sale-leasebacks as a financing tool. The sale-leaseback typically involves an above market purchase price followed by an above market lease; providing current cash to the seller/lessee and an income stream for the buyer/lessor. Federal tax law encourages this system with favorable tax treatment.

However, this system tends to clash with Ohio‚Äôs property valuation scheme mandating that¬†an¬†arm‚Äôs-length purchase price was the ‚Äúmarket value‚ÄĚ for property tax purposes. Thus, much of the federal tax benefit of the sale-leaseback was eaten up by the increased property taxes.

Two recent changes to Ohio law recognize the nature of sale-leasebacks; allowing businesses the carrot of the federal tax advantages without the stick associated with Ohio’s prior tax law.

First, the auditor is now required to determine the value of real property ‚Äúas if unencumbered,‚ÄĚ meaning that the value of the leaseback portion of the sale-leaseback is to be disregarded in determining the value of the real estate (i.e., to the extent the price paid is elevated by consideration of the income stream).

Second, purchase price is no longer dispositive of market value, underscoring the necessity of recognizing the hybrid nature of the sale-leaseback and allowing a proper allocation between the financing tool and the real estate purchase.

Finney Law Firm’s property valuation team is versed in these changes, assisting our clients achieve fair values for properties before local Boards of Revision.

 

In this case, an unfortunate taxpayer obtained a savings on the valuation of its property of more than $1 million (about $25,000 per year in tax savings) in a proceeding before his local Ohio Board of Revision, but it appears he could not prove he actually filed a Complaint.

Result: the Ohio Supreme Court tossed the Board of Revision decision, and the taxpayer lost his previously “won” savings.

Two very simple lessons to be learned as a result of this experience:

1) File your complaint on time and in person (by March 31 of each year); and

2)  Get a keep a date-stamped copy on the filing so you can prove it was timely filed.

Let us help you save money on your property portfolio with our property tax valuation services.

Many of Ohio’s major urban counties, including Hamilton (Cincinnati), Franklin (Columbus), and Montgomery (Dayton), as well as Butler and Warren in Southwest Ohio have either major reassessment years or simpler “updates” for property tax year 2014 ¬†(bills issued first in 2015), and thus the total value of property in each taxing district will either rise and fall next year.

Now this is all a bit complicated, but, vastly simplified, the way taxes work in Ohio is that as property valuations at large fall, tax rates automatically rise close to the same percentages, thus raising much the same revenue off of the new, smaller tax base that that the larger base raised in the prior tax year.  And, conversely, as property tax valuations rise, rates automatically fall.  This entry from the Cuyahoga County Fiscal Officer explains a little more about this.

As this entry explains, the early returns in Ohio for Dayton area assessments and Summit County (Akron)¬†show that¬†the tax bills first issued in 2015 will have lower on-average assessments for properties. ¬†That means, even without a single tax increase on the ballot in those counties, rates will rise about the percentage. ¬†Thus, if your property does not decline in assessed value the amount of the “average” property in that county, your overall taxes will rise.

The effect of this can be seen most noticeably in Montgomery County, where today real property tax rates exceed 3% of of the¬†Auditor’s assessed¬†total true value of properties. ¬†This compares to rates in the sub-2.5% range in most of the rest of the state. ¬†Much of this is due to the rapidly-declining tax base in this area. ¬†Based upon 2014 tax year preliminary assessments, that trend appears to be continuing.

If you are concerned your tax bill is too high, let us counsel you on how to achieve tax savings in your real estate portfolio.

 

When closing a real estate transaction, every state requires that one or both parties report to the local taxing authority the sales price of the property.  This report is used for two primary reasons: (i) to establish the amount of the transfer tax or conveyance fee for the transaction and (ii) to establish the taxable value of the property for real estate taxation purposes going forward.

In Ohio the sale price is signed by the grantee under the deed, and is reported on a state-mandated conveyance fee form.  In Kentucky, the grantor and grantee must sign an affidavit of consideration attesting to the sales price.  Both forms are prerequisites to getting a deed of record.

Now, before we go any further with this post, it is important to note that the amount reported is not discretionary and not to be treated lightly.  In both Ohio and Kentucky, the reporting form is a sworn statement (i.e., under oath), the falsification of which is a felony.  So we are not suggesting misrepresenting anything on those forms.  But  an honest approach to the consideration question can yield different results depending on the circumstances.

With those items¬†as background, many considerations drive the reported sales price on the conveyance fee form or consideration affidavit: (i) the stated contract price, (ii) federal tax considerations (e.g. basis¬†and capital gains), (iii) the value to be “booked” for a sale, and (iv)¬†appearances for banks¬†and equity partners. ¬†But frequently overlooked by the dealmakers is one of the most significant consequences of the¬†price reported: the real estate taxes for years and years going forward will either be dictated by or strongly influenced by the number appearing on that form.

Many times we find in our property tax valuation work that buyers and sellers thoughtlessly put a high value on those forms, which may include the value of the business operating inside the property, furniture, fixtures and equipment, and other factors unrelated to the actual value of the real estate acquired.

With annual rates of taxation in Ohio ranging between 1.7% to 3.2% of the valuation and annual rates of taxation in Kentucky being around 1.1% annually, the consequence of unnecessarily over-reporting the sales price can be costly year after year after year.

Thus, we carefully counsel buyers to consider stripping¬†¬†from the reported sales price the FF&E, the goodwill, cash and A/Rs of a business being acquired, and¬†other factors that are unrelated to the real estate transaction. ¬†The net effect can be an annualized savings going forward of 1.1 to 3.2 percent of the excised property’s value going forward.

Isolated to a single property, the tax valuation services offered by Finney Law Firm can provide significant annualized property tax savings for clients.  Read about these services here.

But for larger companies, “righting” their portfolio can¬†have such a significant impact, that it affects a quarterly earnings report, and indeed increases the market capitalization of the company.

The attorneys of the Finney Law Firm have been retained to represent several significant¬†regional¬†and national corporations in tax valuation work, efficiently evaluating dozens or hundreds of properties using our affiliated valuation consultants, and bringing challenges on those that are “over¬†assessed” by the County Auditor or Property Valuation Administrator.

When the results begin to roll in in the fall of each year, not for just one or two properties, but across the portfolio, the impact to the bottom line — annualized — can be hundreds of thousands of dollars. ¬†Then, the impact on the quarterly and annualized earnings reports can generate a significant increase in market valuation of the company.


Please¬†contact us¬†to learn how we can help your company “right” its portfolio to pay only your fair share of real estate taxes¬†going forward.