State reverts to income test on homestead exemptions

First Posted: 1/22/2014

LIMA — Changes in the Ohio’s real estate tax homestead exemption will prompt county auditor’s offices in the state to adopt new polices and procedures to deal with property owners who may have to present financial documentation to prove they are eligible for the program, the Allen County auditor says.

The move, which will be tax revenue neutral to the taxing entities, is a change to save the state money because local taxpayers must now pay a greater share of their tax burden.

“I understand why the state is doing it, which is the same thing they are doing with the rollback, they are trying to reduce the amount of money that they are sending back to the local taxing entity and therefore the taxpayer is going to be paying more,” Allen County Auditor Rhonda Eddy-Stienecker said, referring to the elimination of the rollback program as well where the state paid the first 10 percent of the tax bill for all property owners plus 2.5 percent for owner-occupied home. “The state has had to change the way they are spending their money and I understand that and I understand they have to stay within their budget and that is what they are doing.”

With the changes in the homestead exemption program, she explained there should be no affect to the counties or the taxing entities overall revenue, the change just affects the taxpayers themselves who will be paying more from their own pocket. The typical Ohioan, who would have qualified under the former rules, will lose approximately $550 in savings on their property tax bill. In Allen County, the average qualified homeowner stands to lose between $300 to $400 and for those in Shelby County they will lose between $265 and $405.

The real estate homestead exemption program was initiated to help property owners 65 years old and older or those permanently and fully disabled who met certain low income requirements. The homestead exemption allowed Ohioans to exempt $25,000 of their property value from local taxes. The state limited the exemption to the owner’s dwelling and up to one acre of land.

In 2007, former Gov. Ted Strickland opened the program to all senior citizens regardless of their income.

In 2013, the state Legislature passed a bill to revert the program back to being based on income eligible. This year the threshold is an individual or joint household Ohio adjusted gross income of $30,500. This excludes Social Security income or other government benefits. The bill also entitles people already enrolled in the program to still be eligible for the exemption regardless of income.

“These changes have really caused a lot of problems for us because we have to set up new policies and procedures,” Eddy-Stienecker said. “We are currently working with the state of Ohio trying to figure out the least amount of work for our department and the least amount of inconvenience for the taxpayer but still follow the law that has been put in place.”

She said she does not know how the state will require homeowners to prove their income level. Homeowners may be required to show their state or federal tax return or another form of documentation to prove they made less than $30,500 in a given year.

For the local office, she said another problem is keeping records straight between those grandfathered in under the old rules and those falling under the newly established rules.

“It is an administrative issue and it would have been easier if they would have just said we changed our minds, we changed the rules and everybody has to qualify instead of grandfathering people into the program because that is the biggest problem we have,” Eddy-Stienecker said. “We can have two people making the same amount of money and it just depends when their birthday is.

“On the administrative side going back to means testing is difficult,” she said. “We need to determine what we can do to make it the least inconvenient.

She explained people have until June 2 to apply for the homestead exemption by coming to the office and filling out the paperwork. They also can call and have the documentation sent to them or they can fill out forms provided on the Ohio Department of Taxation website.

“If you are 65 and older come see us, and if you are not enrolled for the homestead exemption come see us or call us and we will make sure you have the proper paperwork filled out,” Eddy-Stienecker said. “You have until June 2 to get that done this year.”

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