Ohio’s system for challenging property values and taxes

This year’s April 2 deadline for property owners to challenge the county’s assessment of their property values is looming, and the process can be more complex than many expect. Patrick J. Heery, a real estate attorney with Columbus-based Bluestone Law Group, provides an overview of why and how property values and taxes may be appealed.

Ohio has a system by which county auditors must reappraise every parcel of land and building located in their county on a repeating six-year cycle. Those values, multiplied by local tax rates, result in the amount that property owners pay in real estate taxes. Avenues are available to both residential and commercial property owners to challenge the value of their properties. If successful, owners can reap the benefit of slashing their tax bills, often for very significant amounts.

How property values are determined

Each auditor in Ohio’s 88 counties works on a six-year cycle to determine property values and keep them up to date. Year 1, referred to as the reappraisal year, is when the county auditor views the properties and conducts a full reassessment of their values. In many smaller counties, the auditor’s appraisal staff will drive around looking for changes made since the last assessment. Today, in most larger counties, auditors depend more on aerial photography or drones to photograph properties and then use sophisticated computer programs to measure and document recent physical changes made to the properties. Once the auditor determines the reappraisal value, it generally stays in effect for Years 2 and 3 of the tax cycle unless the property is sold, a casualty occurs to the property or an improvement is added.

Year 4, referred to as the update year, is when county auditors make adjustments to property values based upon data gathered from sales that occurred in Years 2 and 3, with analysis provided by knowledgeable market participants such as real estate brokers and investors, and economic reports. Values generally remain the same for Years 5 and 6, unless property is sold, a casualty occurs or an improvement is made.

Tax Year 2017 was the reappraisal year for 28 counties statewide. In 2018, 19 counties are going through the reappraisal process and Tax Year 2020 will see 11 counties undergo reappraisals. This staggered cycle was established for administrative efficiency.

Challenging property values

Normally, owners can challenge a county auditor’s valuation just one time in each three-year cycle (a triennium). Property values are challenged via a “Complaint Against Valuation” that is filed with the local Board of Revision. The same complaint form, which asks 14 questions about the property, is used statewide. It can be downloaded from nearly all county auditor websites as well as from the Ohio Department of Taxation’s website. It is important to fill out the form carefully because incorrect information can result in the dismissal of a case.

In Ohio, property owners pay taxes for periods of time that have already passed — so you may hear that owners are paying taxes one year in arrears. We always look back in time when it comes to paying real estate taxes and discussing property values. Right now, property values for 2017 are the focus of attention. So, property owners who file a complaint before the April 2, 2018, deadline, are contesting the value of their property as it was on Jan. 1, 2017.

Common reasons for challenging property values include declining market values for similar properties, declining rents coupled with increased expenses and vacancies, a property that has become functionally or economically obsolete, and damage or destruction, whether caused by fire, flood, ground movement, mold or wind. In addition, people who recently purchased a property in an arms-length transaction (when both buyer and seller act independently) for less than the county auditor’s value, often have a strong basis for filing a tax appeal.

A good rule of thumb: If you feel there is no way your property can sell for as much as the auditor’s value, consider calling an attorney to get help filing a complaint.

The complaint process

Once the complaint is received, the BOR will take two actions. First, if the owner is seeking a decrease in property value of more than $50,000, the BOR will notify the local school district. School districts generally receive between 65 percent to 70 percent of property taxes collected, meaning that they are the government entity most affected. If the school district decides to become involved with the owner’s case, its counsel is allowed to cross-examine the owner’s witnesses and to present its own evidence of the property’s value.

The second action taken by the BOR will be to schedule a hearing. Usually hearings occur during the summer and fall months and last about 15 to 30 minutes. The county auditor, county treasurer and the president of the Board of County Commissioners (or members of their staffs) sit on the panel. The BOR typically issues its decisions within two to four weeks after the hearing. If an owner is unhappy with the BOR’s decision, an appeal can be filed with the Ohio Board of Tax Appeals or the local County Common Pleas Court.

Legal guidance

Attorneys can come in handy during a property tax appeal in several ways, often saving their clients money in the long run.

In these cases, property owners carry the heavy burden of proving that the auditor’s value was wrong; in contrast, the county does not need to prove that the auditor’s value was correct. This means that owners need to submit reliable, meaningful evidence to establish the property’s true market value as of Jan. 1 of the tax year at issue. In cases where high amounts of tax dollars are involved, the local school district will always be represented by skilled counsel who will aggressively work to get cases dismissed on jurisdictional grounds, often before property owner even has an opportunity to talk about the merits of his or her case; thereafter, the school district’s attorneys will challenge and critique the appraisal evidence submitted by owners.

An attorney who is knowledgeable about this area of the law and who has experience appearing before boards of revision can be critical to winning your case. Attorneys can help owners in assembling the necessary evidence, whether by identifying the correct purchase transaction documents to present to the BOR panel or hiring a skilled appraiser and then reviewing the appraisal report to make sure that its value conclusion is well-supported and reasonable. And, most importantly, these lawyers will have the skillset and knowledge of changes to the tax code and case law that will allow them to rebut any legal arguments made by the other side.