Property Tax Legislation Moving at Ohio Statehouse, Changes to Valuation and Homestead Exemptions


The Ohio Bankers League is following several bills making their way through the Statehouse, which could significantly impact property taxes and homestead exemptions. House Bill 57, House Bill 187, House Bill 254, and House Bill 263 are at the forefront of these discussions, each proposing changes that could affect property owners in the state.

House Bill 57: Indexing Property Tax Homestead Exemptions

House Bill 57, sponsored by Rep. Thomas Hall (R-Middletown) and Rep. Steve Demetriou (R-Bainbridge Twp.), introduces a novel approach to property tax homestead exemptions. The bill aims to align these exemptions with national GDP price increases, offering tax relief to eligible homeowners, including the elderly, disabled veterans, and surviving spouses of public service officers.

Currently, the general homestead exemption allows for up to a $25,000 tax credit on homes owned by qualifying individuals aged 65 and older, those who are permanently disabled, or surviving spouses of recipients. Enhanced exemptions of $50,000 are available for disabled veterans and surviving spouses of public service officers, with the actual tax savings dependent on local tax rates.

Notably, income limits apply for those who first received the general homestead exemption in 2014 or later, but not for those who received it before 2014 or for disabled veterans and public service officer exemptions.

In addition to these changes, House Bill 57 mandates annual adjustments to homestead exemption amounts to account for inflation. These adjustments are computed using the same method as the income limit for the general homestead exemption. The Tax Commissioner is tasked with calculating and certifying these adjustments to county auditors by December 1 each year, with implementation starting in tax year 2023 (or 2024 for the manufactured home tax) due to differences in tax payment timing.

House Bill 187: Overhauling Property Value Assessment

House Bill 187, sponsored by Rep. Thomas Hall (R-Middletown) and Rep. Adam Bird (R-New Richmond), presents substantial amendments to the Department of Taxation's (TAX) property value assessment process for tax purposes. These amendments primarily affect the sales ratio studies conducted by the TAX during the property reassessment cycle.

Under the proposed changes, these studies would include all property sales over the preceding three years, with each sale receiving equal weight. Currently, TAX considers a representative sample of sales and may assign different weights to sales from different years.

Moreover, if the total number of sales of similarly situated property during the three previous years is less than 5% of all such properties in the county, TAX could require the county auditor to conduct actual appraisals of that class of property.

Another key aspect of the bill is the requirement for TAX to consider "current economic conditions" when recommending property value adjustments. These modifications are set to take effect in tax year 2023 and necessitate TAX to recalculate previously certified adjustments within 15 days of the bill's effective date. This delay also extends deadlines for affected counties to finalize tax duplicates and for taxpayers to make their first installment of 2023 property taxes.

House Bill 254: Modifications to Disabled Veteran Homestead Exemption

House Bill 254, introduced by Rep. Tracy Richardson (R-Marysville) and Rep. Adam Holmes (R-Nashport), addresses the homestead property tax exemption for disabled veterans. The bill outlines varying reductions based on the veteran's disability rating.

For disabled veterans with a total disability rating or a rating for compensation based on individual unemployability, the reduction would equal the entire amount of current taxes for the tax year. Veterans with a disability rating below total but above seventy percent would receive a reduction calculated by multiplying ten thousand dollars by specific factors related to their disability. For all other disabled veterans, the reduction would be calculated by multiplying five thousand dollars by the same factors.

This change is designed to simplify the tax code, providing disabled veterans with a clearer and fairer system for property tax reductions. Importantly, the reduction specified in House Bill 254 would replace any other tax reduction outlined in the existing tax code and would apply to a single homestead owned and occupied by the disabled veteran.

House Bill 263: Property Tax Relief for Elderly Homeowners

House Bill 263, introduced by Rep. Dani Isaacsohn (D-Cincinnati) and Rep. Thomas Hall (R-Middletown), offers potential property tax relief for homeowners who are at least seventy years old. To qualify for this relief, homeowners must meet certain criteria, including continuous ownership and occupancy of the homestead for ten or more years, a total income not exceeding seventy thousand dollars, and a true property value of less than one million dollars.

The reduction provided by House Bill 263 is determined by calculating the difference between the current year's taxes and the taxes for the previous year, taking into account various reductions and adjustments in the tax code. This provision aims to provide financial relief to elderly homeowners who meet the specified criteria, assisting them in managing property tax burdens.

Senate Bill 2: Neighborhood Development Area Tax Exemption

Introduced by Sen. Kirk Schuring (R-Canton), Senate Bill 2 seeks to empower municipal corporations and townships to designate specific areas as "neighborhood development areas." These designations are intended to encourage the development of affordable housing, workforce housing, and address housing shortages in the community.

To establish a neighborhood development area, municipal corporations and townships must adopt an ordinance or resolution that outlines essential details such as parcel lists, designated officers, and the duration of the area's designation. Importantly, this designation allows for a percentage of property valuation (up to 75%) to be exempt from taxation, provided a mutually acceptable agreement is reached with the relevant school district.

However, there are specific limitations. The designated area cannot exceed 300 acres, and each municipal corporation or township can only have up to three designated areas concurrently. Tax exemptions offered under this bill are substantial. Newly developed residential properties enjoy an exemption until the residential structure is occupied. If an owner resides in the property, a percentage of the assessed valuation is exempt for up to nine years. Remodeled residential structures, occupied by the owner, can see a percentage of the increased assessed valuation resulting from remodeling exempt for up to five years.

Property owners seeking these exemptions must file an annual application with the designated officer or employee, who will verify compliance. In the first year, the officer or employee can even submit the exemption application to the tax commissioner on behalf of the property owner. Subsequent years' exemptions continue automatically unless the property no longer qualifies.

Senate Bill 134: Modifications to Disabled Veteran Homestead Exemption

Senator Frank Hoagland (R-Mingo Junction) has introduced Senate Bill 134, which proposes modifications to the disabled veteran homestead exemption. Under this bill, real property taxes on a homestead owned and occupied by a disabled veteran can be reduced under specific conditions.

If the disabled veteran has received a total disability rating for a service-connected disability or a total disability rating for compensation based on individual unemployability for a service-connected disability, the reduction is calculated by multiplying fifty thousand dollars of the property's true value by certain factors outlined in the legislation.

Alternatively, if the disabled veteran meets certain criteria, such as reaching age fifty-nine or having served twenty or more years in the armed forces or national guard, they can qualify for a reduction based on their disability rating assigned by the United States Department of Veterans Affairs. However, it's essential to note that a disabled veteran can only qualify for one of these reductions, either option (a) or (b), but not both..

Senate Bill 136: Property Tax Cap on Qualifying Owner-Occupied Homes

Senate Bill 136, a reintroduction from the 134th General Assembly by Senator Hearcel Craig (D-Columbus), would cap annual property tax increases for homeowners with income at or below the area median income at 5% per year. This cap provides essential protection for homeowners against steep tax hikes. If taxes exceed this limit in any year, the excess amount is reduced from the property's taxes.

To be eligible for this reduction, homeowners must own and occupy their homes with an income at or below the county's median income level. The property must also meet the criteria for the existing 2.5% property tax rollback for owner-occupied homes. This includes manufactured or mobile homes and two- or three-unit residential buildings.

Furthermore, if significant improvements are made to the property, the reduction is temporarily suspended and recalculated based on the post-improvement tax bill.

In conclusion, these bills represent significant changes to Ohio's property tax landscape, with the potential to provide relief to homeowners, encourage affordable housing development, and better support disabled veterans. As they progress through the legislative process, it will be essential to monitor their impact and implications for property owners across the state.In conclusion, these Ohio Legislature bills present a range of changes to property tax laws, impacting homestead exemptions, property value assessments, and tax relief for disabled veterans and elderly homeowners. As these bills progress through the legislative process, the OBL Government Relations team will provide our members with updates.