Declining property values mean…increasing tax rates

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.


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