Most people are familiar with real property taxes. These are taxes property owners pay for government services, schools, and other items.

    The amount of the tax depends on two factors. The first; the taxing authorities estimate of property value. The second; is the tax rate that is largely determined through the community voting process. There is not much that can be done in the short-run to alter the tax rate.

    But understanding the valuation process could result in substantial savings if your property valuation is too high.

    The taxing authorities undergo a periodic appraisal for all properties in their jurisdiction. The appraisal process is called a "mass appraisal" because thousands of properties are appraised in a short time. Although each property receives a value estimate, the estimate is usually based on general market data and not tailored to each specific property. This process is a huge undertaking and taxing authorities are often faced with performing the task with limited resources. In fact, often the entire project is out-sourced to a third party mass appraisal company.

    In Ohio, each of the 88 counties is responsible for establishing a tax value for the properties within their borders. In general terms, the property taxes in Ohio are determined by the following formula:

            Effective tax rate x Assessed Value / $1,000 = Annual Property Taxes

where Assessed Value = Market Value x 35%.

        Taxes are paid every six months, twelve months in arrears. For example, this means that payments made in January 2011 are for the tax period January - June 2010. All the properties in the County are revalued every six (6) years with an update every three (3) years.

    In some cases, 2005 was a revaluation year and many property owners saw large increases in their property values.

Now may be the time to review your assessment

and your property’s fair market valuation.

    If it appears high, appeal the valuation. A successful appeal for the 1999 would result in tremendous savings over the next six years until the next revaluation.

    Challenging the tax rate is a formal process that begins with filing an appeal of the tax valuation. The form used for the appeal (also called a complaint) is the DTE Form 1 and is available at the County Auditor's office. For residential properties, the person whose name appears on the ownership deed should sign the complaint form. For commercial properties, an attorney should sign the form (currently others can sign, but pending legislation may reverse this resulting in the complaint being dismissed). To challenge the 2010 valuation, the form must be submitted no later than March 31, 2011.

    The appeal will be scheduled by the County and a hearing date set. The amount of time between filing the complaint and the hearing date varies based on the number of complaints filed. The appeal is heard before the Board of Revision. The officials on the Board include a County Commissioner, County Auditor, and County Treasurer. However, it is almost always the case that representatives of these persons is sent to hear the cases because of the volume of work.

    The hearing is scheduled for a short amount of time based on the property type. For residential properties, approximately 15 minutes is allotted. Commercial hearings are usually allotted 30-60 minutes. It is responsibility of the property owner to prove that the County's valuation is too high.

FAQ: What proof are they looking for?

    The most compelling evidence of value is a recent sale. The Board of Revision considers a sale of your within the last year to be relevant. Other evidence can include rents, listings, and sales in the area. The Board of Revision does not consider the assessed values of other properties relevant. If you don't have any of this evidence, it will be your word against theirs, and they always win.

    The local school board may also challenge your appeal. The schools lose when property taxes are reduced. The County is required to notify the school board when a reduction in value of $50,000 or more is sought. In these cases, the school board almost always files a counter-complaint to keep the valuation the same. They also typically send their attorney to argue their point and often have an appraisal.

    When the stakes are high, it is in your best interest to obtain an independent appraisal of the property as of the tax value date (January 1, 2010).  A qualified appraiser incorporates all the market evidence and uses it to express an opinion of value for your property. The appraisal focuses all the general market data out there into a coherent argument of value. This argument can be succinctly presented to the Board in language that is familiar to them. The key is selecting an independent and qualified appraiser. The Board hears a lot of complaints and sees many appraisers. Those that bend numbers to suit their client are quickly identified and lack the credibility needed to sway the Board. Choosing the right appraiser is more important than "getting the lowest number" or saving a few hundred dollars.   A botched appeal can cost thousands.

FAQ: How do you choose an appraiser?

    Look for qualifications and local experience. The Board of Revision knows the market and your appraiser should also. Qualifications are an indication of the level of skill and dedication a person has to their profession. State Certification is a minimum, but those that have gone the extra mile to obtain more rigorous designations have illustrated they have the understanding and commitment to doing appraisals right.

    What happens if your appeal fails? Filing an appeal is not without risk. The Board of Revision has three options during an appeal. Do nothing, lower the valuation, or raise the valuation. The ability to raise the valuation is designed to keep those appealing honest and keep appeal volumes down. If your complaint is unsuccessful, you have the option to appeal the Board of Revision's decision in Common Pleas Court or at the Ohio State level at the Ohio Board of Tax Appeals. You will need an attorney to guide you through the appeal process and the total cost will be much higher than the Board of Revision appeal.

FAQ: Should you appeal your property taxes?

    It depends on the amount of savings you might be able to achieve. The savings should be considered over the time between the appeal year and the next revaluation (2005 - 2011 would be six years of savings). That is why appealing this year is better than waiting until next. The potential savings depend on the amount of the reduction and the tax rate for your property. The appraiser can help you with this estimate prior to the appeal.

    The costs of the appeal include your time or the attorney's time and the appraisal cost. If your appraiser is independent, they won't guarantee that their value opinion will result in a reduction for your property. They only know that after the market research has been completed. In most cases, the appraiser has a good idea of a range of value for your property type and can tell you if it makes sense to investigate more closely. We typically structure the assignment in a two phase process. The first phase is to gather evidence to form an opinion of value. The second phase is to detail the evidence and write the report.  A fee is charged for each phase with the second phase performed only if the value opinion makes economic sense for the appeal. The fees depend on the property and complexity of the appraisal assignment.

    A successful appeal is a team effort that includes a good real estate attorney, an independent appraiser, and the property owner. It is responsibility of the property owner to prove the County's estimate of value wrong. An independent appraisal is critical to credibly demonstrate to the Board of Revision that you seek a fair value, not a fraudulent value.

    The appeal process is time consuming and can be costly, but the benefits of challenging value in the first year of the revaluation cycle can be well worth the effort.