Why would you consider Ohio for your next real estate investment? The Buckeye State is known for its delicious food, impressive parks and attractions, great outdoors, and rich culture.
Also, Ohio is so affordable compared to other states, making it a great place to buy property.
However, there are many things to understand before making this investment or if you already bought a house there. Your property taxes are one of the most important.
Do you want to calculate your property tax in Ohio and know your annual obligations or the best ways to lower these amounts? Here's all the information you were looking for!
Understanding Different Types of Property Tax Bills in Ohio
Did you know that the real property tax is Ohio's oldest property tax? This state has imposed an "ad valorem" tax on property since 1825. However, the system has changed over the years.
In 1976, House Bill 920 allowed the General Assembly to create a process for assessing real property values and determining property tax rates.
Ohio uses property tax dollars to provide local government units, including school districts, with a base amount of operating revenue to fund their services and projects.
In this state, the Department of Taxation defines the "effective tax rate," which results from adjustments based on rising or falling property values in an area. Therefore, tax bills remain constant throughout Ohio even if home prices go up or down.
How Many Times Do You Pay Property Tax a Year in Ohio?
Ohio homeowners should pay at least one-half of the real property tax bill by December 31, with the remainder due by June 20.
However, these deadlines are often extended if the tax duplicate isn't delivered on time. In this case, deadlines are extended by 30 days.
If the county auditor or the treasurer reports an emergency to the Tax Commissioner, deadlines can also be extended by 15 days.
Consequences of Late Payments
As a homeowner, property manager, or real estate investor, it's essential to pay property taxes on time. Otherwise, you may face different consequences, including financial penalties.
Under Ohio law, all property taxes are subject to a 10% penalty for delinquent payments. However, if you pay the balance due in full within the first 10 days after the due date, the late payment penalty would only be 5%.
Penalties can be remitted under certain circumstances. In addition, taxpayers can appeal them to the local County Treasurer's office.
Delinquent property tax payments are subject to interest, which are added twice a year as follows:
- Interest is added to the unpaid tax amount from previous tax years on the first day of the month after the due date of the second half.
- Interest is added to the unpaid tax amount on December 21.
Tax Lien Sale or Tax Foreclosure
Homeowners with delinquent property taxes in Ohio may also face a tax lien sale or tax foreclosure.
Besides requiring local government officials to give property owners proper notice before carrying out these sales, Ohio laws allow taxpayers to recover their property. You only have to pay delinquent amounts plus interest, fees, and other costs.
However, if you fail to pay these amounts, the county treasurer is authorized to sell the lien after it's attached to your property or foreclose.
How to Pay a Property Tax Bill in Ohio
Ohio offers multiple options to pay property taxes, although they may vary from county to county. However, most homeowners can pay off their bills by using the following methods:
- Online payments, with Visa, MasterCard, Apple Pay, PayPal, Venmo, Electronic Check, and others
- Phone payments
- Text payments
- Mail payments
- In-person payments
How Much is Property Tax in Ohio?
Ohio doesn't have a statewide property tax, but rates vary from county to county because they're levied locally. Let's take a closer look at the elements that may affect your tax bill:
Ohio Property Tax Rates
The total tax rate for each particular unit includes levies enacted by a legislative authority. Voters in all taxing jurisdictions where there is property can enact liens.
Under the Ohio property tax system, each combination of taxing jurisdictions creates a separate taxing district, which is an entity authorized to impose tax rates.
Appraisal and Assessed Value
Ohio counties can conduct full appraisals once every six years, updating property values in the third year after reappraisal based on current market conditions. Overall, appraised values should be equal to the market value.
However, in Ohio, assessed values are only 35% of the appraised value and often vary due to differences between counties' appraisal methods.
That's why the state of Ohio publishes "sales ratios" that represent the assessed value as a percentage of the actual value. While this should be 35%, it's closer to 30% in some counties.
In Ohio, property tax rates are expressed as millage rates. Essentially, each mill represents $1 of tax for every $1,000 in assessed value.
However, the Ohio Constitution prohibits local government units from levying property taxes that exceed 1% of the property's appraisal value if it isn't approved by voters. It's the 10-mill limitation, also known as non-voted or "inside" millage.
These mills are levied on taxable value. As mentioned, it's 35% of the appraisal value. Therefore, this measure results in a limit of 0.35%, which is even stricter.
Also, there are three different types of tax levies. These are:
- Inside levies (unvoted)
- Fixed sum levies (approved by voters)
- Fixed-rate levies (approved by voters and the most common type of levies)
Average Effective Tax Rate
Since differences between all counties' appraisal methods and levies make it impossible to compare millage rates, homeowners should take a look at the effective tax rate.
It's calculated as the median annual property tax as a percentage of the county's median home value. Let's check the averages in some counties:
- Franklin County: 2.06%
- Cuyahoga County: 2.51%
- Hamilton County: 1.96%
- Lawrence County: 0.86%
How is Property Tax Calculated in Ohio?
Considering all the elements mentioned above, when it comes to property, Ohio taxes are calculated based on the assessed value, which is 35% of the appraisal value.
These are the steps you must follow:
- Multiply the effective tax rate of levies (voted) by the assessed value of the property
- Apply deductions to get the amount owed
The tax bill sent by the county treasurer contains more information about your property's effective tax rate.
How Can I Lower My Property Taxes in Ohio?
Do you want to lower your property taxes to reduce your financial burden? Ohio has multiple options, including the following:
Appeal the County Auditor's Valuation
You can appeal a county auditor's valuation once every three years if you think your property value isn't correct. This process should be challenged through a "Complaint Against Valuation" that is filed with the local county Board of Revision (BOR).
Ohio also has several relief programs and exemptions that property owners can use to reduce their property tax bills. These are:
- Homestead Exemption Provides Property Tax Relief for Senior Citizens and the Disabled
- NEW Homestead Exemption for 100% DISABLED VETERANS and their surviving spouse
- Owner Occupancy Credit (formerly known as the 2 ½ % Tax Reduction) for Owner-Occupied Home
In Ohio, property taxes are used to fund local governments, projects, and services. That's why authorities are quite strict with related rules.
However, you can create an efficient tax strategy and find legitimate ways to reduce these amounts to avoid huge tax bills that may affect your finances.
This guide contains valuable information on Ohio property taxes. In addition, you can contact a tax professional if you have doubts or questions on this topic.