New Year, New Tax Valuations & Tax Rates

Tax Year 2023 real estate tax payments are due very soon in all Ohio counties.  In reviewing your tax bills, you should be aware of recent changes in the law and in the valuation of real estate in the event you wish to challenge the tax valuations, and potentially recognize tax savings.  This Buzz will highlight issues that should be considered by all owners of real estate.

Tax Year 2023 Reappraisals

Twenty-eight (28) of Ohio’s eighty-eight (88) counties performed their six-year reappraisals of real estate, establishing new valuations that now may be challenged by taxpayers:

Here is a chart listing those 28 counties:

Additionally, county auditors in thirteen (13) Ohio counties performed “triennial updates,” which very often means a percent adjustment to reflect county-wide changes in property values.  Here is a chart listing those 13 counties:

File valuation complaints by April 1, 2024

Although the county auditor’s reappraisals set the value of property as of the 2023 tax lien date, which was January 1, 2023, the time to challenge those valuations is now, and extends until the filing deadline of April 1, 2024 (the statutory deadline is March 31, but since that date falls on the weekend, Monday April 1 is the last day to file).  A property owner may, as a general matter, file a complaint in any of Ohio’s eighty-eight (88) counties, but the reappraisal and update counties merit special attention since values may have been significantly increased.  Remember that business entities should employ an Ohio-licensed attorney to assist in filing the complaint and to conduct the hearing before the county’s board of revision to avoid unauthorized practice of law issues, to ensure compliance with procedural rules, and to have the best opportunity for potential savings.

School board complaints and H.B. 126 litigation

Ohio law allows school boards to file complaints to increase property values, thereby increasing school-district revenue.  During 2022, the Ohio legislature passed Amended Substitute House Bill 126 (“H.B. 126”), which imposed restrictions on school board valuation complaints.  Some of those restrictions also affected complaints filed by property owners who file “third party complaints” seeking to increase other property owners’ valuations.  We reported on those changes in an earlier buzz.

The calendar year of 2023 saw an explosion of litigation in which school boards pushed back against those restrictions:

• Constitutional challenge. Several Franklin county school boards and a Franklin county “third party complainant” filed a civil case asking the common pleas court to rule many of H.B. 126’s restrictions unconstitutional—primarily on the basis that school board and third party complainants should not be subject to different rules than those that apply to the owners of property whose value is at issue. The Ohio Attorney General has filed a motion to dismiss the action.  No ruling has yet been issued in that case.
• Delay the prohibition against BTA appeals. Once the county board of revision has ruled on a complaint, H.B. 126 bars school board appeals from that ruling to the Ohio Board of Tax Appeals.  The school boards have successfully argued to three appellate courts that the prohibition does not apply until the school board has filed a complaint for a later tax year, but the Ohio Supreme Court has accepted jurisdiction in one case and will review the appeals court ruling.
• “Ride along” appeals. School boards also seek to sidestep the prohibition against appeals to the Ohio Board of Tax Appeals by recruiting a third party property owner—sometimes referred to as a “straw party”—to file the valuation complaint, after which the school board files a counter-complaint.  Having made itself a party to the case, the school board can “ride along” to the Board of Tax Appeals if the third party complainant appeals to the Board of Tax Appeals—and once the school board is a party at the Board of Tax Appeals, it may fully participate in seeking an increase in valuation.
• Alternative appeal path. School boards have also tried to “end run” the prohibition against appeals by using an alternative statute to take appeals from the boards of revision to the common pleas court of the county where the property is located.  Many of those courts, especially in Cuyahoga and Delaware counties, have dismissed those appeals, but the school boards are appealing the dismissal orders to the courts of appeals.
• Defying the “prior sale” rule. B. 126 not only limits school boards to complaints that point to an arm’s-length sale of the property, but also requires that the sale have occurred before, not after, the tax lien date of the tax year at issue.  For example, if a school board now during 2024 files a complaint against the auditor’s valuation of property for tax year 2023, that sale must have occurred before January 1, 2023—which is the tax lien date for tax year 2023.  Some school board complaints have been filed in which the school board openly relies on a sale that occurred after the tax lien date of the year at issue.  Recently, the Franklin County Board of Revision dismissed numerous complaints based on school boards violating the prior sale rule.
• School boards file complaints based on an entity transfer. Many businesses see advantages in transferring real estate not by executing a deed to the buyer, but by selling to the buyer an ownership interest in an L.L.C. that owns the real estate as its sole or principal asset.  In a December 2023 order, the Ohio Board of Tax Appeals held that a school board can file an original complaint predicated not on a deed sale but on an entity transfer price that is alleged to equate to a sale of the property—according to the BTA, H.B. 126 does not require the prior “sale,” for purposes of jurisdiction at the board of revision, to be a deed sale as opposed to an entity transfer.  Snider Crossing, L.L.C. v. Warren Cty. Bd. of Revision, BTA No. 2023-1195, 2023 Ohio Tax LEXIS 2172.

If you would like to discuss the process of appealing your real estate tax, please contact Steve Hall, Bob Maier or any other ZHF professional.