Whether you own investment or owner-occupied real estate or a private residence, you’ve likely questioned how the taxes for your property are set and whether they are too high.
Although certain credits and exceptions may apply to a particular situation, the taxes levied on your real estate are the product of multiplying a tax rate (sometimes referred to as a millage rate) by the assessed value of your property. The rate is set through the political process, so the only real influence you have over that aspect of your taxes is at the ballot box.
However, if you think that the assessed value of your real property is set too high, both Ohio and Kentucky have appeal procedures you may want to consider in order to attempt to have the value, and therefore your tax bill, lowered.
Ohio Real Estate Tax Appeal Filing Deadline
County real estate tax bills received by early January, 2013, reflect taxes due for the first half of tax year 2012. Those bills will show the assessed value (35% of the County’s appraised “market value”) of the property. You have a right to challenge the 2012 valuation by filing a tax appeal with the Board of Revisions for the County in which the property is located, but your complaint must be filed between January 1, 2013 and March 31, 2013.
Kentucky Real Estate Tax Appeal Filing Deadline
Property owners in Kentucky typically receive one real estate tax bill each year, in September or October, and that bill is for the tax year in which it is received. Some Kentucky cities also have their own separate tax bills. Property valuations may be reassessed annually with the results available in April of each year and affecting the taxes for the year in which the valuation is set (i.e. April, 2013 valuations are for tax year 2013).
If you would like to challenge an assessed valuation, Kentucky property owners must follow a two step process.
- The first step for is for owners to set up a conference with the County’s Property Valuation Administrator (“PVA”). This conference must take place prior to the County’s annual inspection period, which starts on the first Monday each May. You should check real property valuations each year in April.
- If you aren’t satisfied with the results of the PVA conference, you can appeal the assessed valuation to the local Board of Assessment Appeals. The deadline to file an appeal is usually (depending upon when holidays or weekends fall) around the third Tuesday of May; this year, the specific deadline for filing appeals is May 21, 2013.
How To Know Whether The Assessed Value Is Too High
Appraisers use three methods for establishing the value of real property. While there are many complexities, the names and basic definitions of each is as follows:
- Income approach – uses the net income and a rate of return an investor would seek for a particular type of property.
- Comparable sales approach – sales prices of similar properties provide the basis for a value.
- Cost approach – an estimate of the cost to replace the improvements on the property is used to form the basis for a value.
Prior to obtaining an appraisal, you may have indications that your property assessment needs to be investigated, including: lower sales prices reported for nearby properties you consider similar; the county has just completed its regular re-appraisal and you have experienced a large increase; as has been the case in many sectors of the economy over the past few years, prices appear to you to be very depressed, yet your taxes keep going up.
The important thing to keep in mind is that, if you would like to challenge the valuation, and you have reason to believe that the amount at issue is large, you will want a licensed appraiser by your side to produce evidence to the hearing board that is more than just your opinion. One common exception to this recommendation is when you have recently acquired the property through an arms-length purchase, and the purchase price is lower than the county valuation, you may be able to use a closing statement or other evidence from the purchase to establish the lower value for the hearing board.
If you are unsure as to whether your particular situation warrants paying for an appraisal, we can help you analyze the facts and law that will play a part in an appeal.
Our Strauss Troy Real Estate | Finance team has broad experience representing real property owners in property valuation cases in both Ohio and Kentucky. You can contact any of us for help with valuation and appeal process questions, or any other real estate or tax related questions: Anthony Barlow, Frank Klaine, Timothy Theissen, Brian Eviston, Patrick Newton and Michael Ruh.