A topic on everyone’s mind today, and one real estate licensees should understand in representing buyers and sellers alike, is how property taxes are determined. This is particularly true in central Ohio, considering the reappraisals recently completed in Delaware, Franklin and Pickaway Counties.
The 2017 Sexennial Reappraisal
In Ohio, county auditors are required to do a full, general reappraisal every six years. The
process is called the Sexennial Reappraisal. The auditor or their qualified appraisers are
required to view and appraise every property in the county for this purpose. For a county the size of Franklin, the process can take up to two and one-half years to be completed. Property owners just recently received notice from the county auditor of their tentative new valuation.
During the third year, in between reappraisals, each county auditor is required to perform a statistical analysis of the sales which have occurred in the prior three years, and provide for a percentage adjustment to be made to the values of all properties in each given marketing
neighborhood. The adjustments are stratified according to value, to assure equity in valuations is maintained or corrected, based on the analysis of comparable like sales. This in between process is called the Triennial Update. The next Triennial update for Delaware, Franklin and Pickaway Counties will take place in 2020.
To see a schedule for all of Ohio’s counties see this link.
In addition to the statutory Sexennial Reappraisal and the Triennial Update, each county auditor is also charged with annually reviewing the properties which have been found to have changed and are no longer appraised at their fair market value. Most often, the changes are due to new construction, a change in the physical size or shape of the land, or demolition or damage to structures on a property.
The tax rates are determined by each community, and are expressed in terms of mills (or millage.) One mill of tax is equal to $1 in tax per $1000 of assessed property value. Tax rates are levied by the various taxing authorities within a community: the county, the city, the local school system, library, the metro park system, etc.
Protections for Ohio Property Owners
One protection for Ohio property owners is Ohio’s Constitution, which limits these taxing authorities to collectively tax only up to 1% of property value without seeking voter approval. This limit is known as the “10 inside mills” or $10 tax per $1000 of assessed property value. As property value increases, so too will the taxes due to these 10 mills. It is important to understand, however, that this is only a small portion of a total tax bill.
Then, in 1976, Ohio enacted even additional protection for property owners, the legislative tax reform referred to as House Bill 920. The purpose of HB920 was to prevent inflation from automatically increasing voter-approved taxes. Here’s how HB920 works:
- Most of a community's tax millage is made up of taxes approved by voters, either in the form of approving a city charter, or by passing individual tax levies.
- When the voters approve a tax levy, they are agreeing to pay a specific amount of money for a specific purpose over a specific amount of time. Each property owner pays their share, in proportion to the value of their property.
- When property values increase due to inflation (or a reappraisal or update), HB920 kicks in.
- Example - Suppose a school district received voter approval to raise $5 million through a 5-mill levy. The following year, after a reappraisal, property values have increased. HB920 will not allow the school district to receive any additional revenue from this voted levy. The voter-approved 5 mills will be automatically reduced to a millage amount that will generate only the $5 million; and, accordingly, each taxpayer will pay a lower "effective" tax rate. This is known as the “reduction factor.”
Thanks to these legislative protections for Ohio’s property owners, protections for which our industry has fought, a rise in property values does not equal the same rise in property taxes. For the taxing entities to raise more revenue, they must go back to the voters for approval of additional levies.
Answering your Reappraisal Questions
Informal Value Reviews – Dates/Locations – Franklin County
Frequently Asked Questions
Two Options for Challenging a Property’s Valuation
When an owner received the recent notice from the county of the tentative new valuation for 2017, they were provided a list of locations and dates for informal reviews where they could meet with representatives of the auditor’s office and present reasons to modify the new valuation. Property owners can take advantage of the informal review process throughout the month of September.
Additionally, property owners can file a formal application to challenge with the Franklin County Board of Revision, beginning this December, after the mailing of tax bills, and until April 2 of next year.
Historically, according to the Franklin County Auditor’s office, approximately three percent of property owners appeal new valuations through either the informal or the formal process. Many of them will receive modifications to their valuation, and the appropriate adjustment will be made to their property taxes.
For Realtors®, it is highly recommended that the wise approach when clients or customers have tax questions is to refer them to an accountant, attorney or tax professional.
Rising Homes Values in Central Ohio*
According to estimates from the Franklin County Auditor, based on preliminary
reappraisals, property taxes will rise an average of about two percent for Franklin
County homeowners. Also according to the auditor’s staff, between 85% and 95% of a property’s tax bill will not be adversely impacted by higher valuations due to HB920. Only a small portion of a tax bill, known as “Inside Millage”, is impacted by higher valuations. For example, in the Canal Winchester School District, a property can rise 14.9% in value, yet the actual tax bill only goes up 2%.
Tax information including “Inside Millage” amounts can be found on the county auditor website, by parcel. Click on “Quick Links” and then “Levy Estimator”.
School Average Rise Average Rise
District in Property Value in Tax
Bexley 13.7% 2.39%
Canal Winchester 14.9% 2%
Columbus 15.5% 2.57%
Dublin 8.5% 1.33%
Gahanna Jefferson 13.3% 2.07%
Grandview Heights 29.9% 4%
Groveport Madison 15.9% 1.86%
Hamilton Local 17.3% 2.57%
Hilliard 10.5% 1.49%
Licking Heights 14.2% 10.47%*
New Albany-Plain Local 11% 1.58%
Reynoldsburg 13.7% 1.84%
South-Western 14.6% 2.17%
Upper Arlington 13.6% 2.33%
Westerville 13.8% 1.68%
Whitehall 17.9% 2.88%
Worthington 12.5% 1.96%
Source: Franklin County Auditor
* Includes levy increase
Answers to frequently asked questions about the 2017 reappraisal process can be found on the Franklin County Auditor’s website.
Thanks to Scott Stevenson of Northwest Title Family of Companies; and Andrew Show of Buyer’s Resource Realty Services and Tim Taylor of HER, Realtors® of Columbus REALTORS® Standard Forms Committee for their collaboration in this article.