July is the month when real estate taxes are due to each county treasurer in Ohio. The specific July deadline has now passed for all counties in our region. Therefore, as of today, every tax parcel’s “July installment amount” is late and subject to a late fee and interest if it has not been paid.
There are four major aspects of Ohio real estate taxes that can help clarify the numbers and calculations set forth on a real estate tax bill. Although many of us joke that we never use algebra since when we were forced to study it in high school, real estate tax calculations are like a long algebraic equation.
First, each parcel of real estate is appraised. This happens every six years in each county. Three years after each county’s appraisal of its real estate parcels (the appraisal year), the county updates each parcel’s values (the update year) based upon estimates of economic conditions and other changes in the neighborhoods surrounding each parcel.
Ohio’s 88 counties are split into thirds as to which counties are scheduled to be appraised and updated when. Allen County is updating its values this year. Auglaize and Putnam Counties update their parcel values next in 2020.
A property’s value can also be adjusted when the property has been recently sold between an unrelated buyer and seller. However, Ohio courts often struggle to define how long a recent sale price controls a parcel’s appraised value.
Second, the value for agricultural parcels that satisfy the Ohio “current agricultural use valuation” laws will have its values adjusted each year based upon a complex formula categorized by soil type that incorporates the last seven years of farm economic conditions.
Third, the value is multiplied by 35 percent to create each real estate parcel’s “assessed value.” The assessed value is the value that is multiplied against the parcel’s millage/tax rate to reach the gross tax total.
The assessed value calculation could be seen as unnecessary in light of all real estate using the same 35 percent. In other words, why not just decrease the millage/tax rate by 65 percent? The assessment process is a vestige of when personal property was taxed like real estate in Ohio, which personal property taxation ended at the end of 2008 for most personal property. When it was taxed, personal property had multiple sub-categories, all of which had unique assessment percentages, and which were each less than 35%. In fact, annual decreases in assessment percentages was part of the method used to “phase out” the personal property tax.
Fourth, after the gross tax amount is calculated through the process set forth above, there are certain “credits” that decrease the final tax bill on some parcels. People with permanent disabilities or over age 65 with limited income can get a “homestead” credit for residential parcels that they live on. There is also a 2.5 percent discount on some of tax levy amounts on some residential property occupied by owners regardless of age or income.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.