By Jeff Levine
Ohio recently made one of its most dramatic-ever changes to real estate tax valuation law. For years, school districts have been able to aggressively pursue tax valuation complaints to fight for more tax dollars. On July 21, 2022, a new law became effective that significantly limits school districts’ abilities to pursue tax valuation complaints. The new law applies to cases filed for tax year 2022 (which are filed between January 1 and March 31, 2023) and onward. Under the new law, a school district may only file a tax valuation complaint against a privately-owned property if the following three criteria are satisfied:
(1) the sale of the property must have been an arm’s-length transaction;
(2) the sale of the property must have closed during the year prior to the tax lien date of the tax year for which the complaint is filed (for example, if a property is sold during 2022, the school district can only file a complaint for the following tax year – tax year 2023); and
(3) the property must have sold for a purchase price that is both 10% and $500,000 more than the auditor’s prior valuation of the property.
The $500,000 threshold is indexed to inflation and will increase in future tax years. Under these criteria, school districts will only be able to file valuation complaints on the sales of multi-million dollar commercial properties, which usually comprise a small portion of the properties within a school district. The additional “10%” requirement will restrict school districts even further. For example, if a property valued at $6,000,000 sells for $6,500,000, the school district would not be able to file a valuation complaint because the increase in value does not exceed 10% of the prior valuation.
The new law also prohibits “private pay settlement agreements,” which allow property owners to settle tax valuation cases by directly paying the school district in exchange for dismissals. In addition, school districts have been stripped of their right to appeal county board of revision decisions to the Ohio Board of Tax Appeals – they will now only get one bite at the apple at the board of revision level, and property owners will no longer be tied up in litigation for multiple tax years.
These sweeping changes to Ohio property tax law, as well as additional minor changes, will serve to benefit private property owners, especially owners of large commercial properties, which are school districts’ favorite targets for tax valuation complaints. School districts’ ability to increase tax revenue by initiating tax valuation complaints has never been so limited. Meanwhile, property owners’ abilities to pursue reductions in their own property values remain exactly the same – which has commercial developers dancing in the streets.
If you have any questions about property tax law or you are interested in seeking a property tax valuation reduction, please contact Jeff Levine at JALevine@strausstroy.com or 513-629-9425.