Ohio law has long relied on court precedents to value Section 8 and Section 42 subsidized housing for property tax purposes. Conflicting precedents and statutory provisions often led county auditors to overvalue these properties, resulting in inflated property tax bills and needless litigation. Recently, the Ohio General Assembly enacted legislation mandating a process for county auditors to follow beginning in 2025 when valuing federally subsidized housing.
New Valuation Standards
Under the old law, county auditors were required to look at the overall rental market to value government subsidized properties, rather than comparable subsidized properties. Now, county auditors must consider each property’s operating income and expenses. Generally, federally subsidized housing has lower operating income and higher operating expenses than the market. This is a welcome change for taxpayers, who can expect to receive massive reductions in their taxable values compared to unsubsidized properties.
The new law does, however, impose a floor on values, requiring a county auditor to never lower a property’s total value below the greater of $5,000 per unit or 150% of the property’s unimproved land value. These thresholds are low and are not anticipated to greatly impact new values.
New County Reporting Requirements
To effectuate these changes, the law imposes new reporting requirements. Each year by March 1, property owners must report the property’s operating income, expenses, and annual amount of replacement reserves. In years following a reappraisal or triennial update, the property owner must report such information for the preceding three years. The county auditor will use this information to value such federally subsidized properties.
This financial information must be audited by a certified public accountant prior to filing. If the audit is not completed by March 1, property owners are given an additional 30 days after the completion of an audit to file updated financial information.
Property owners who do not report this information will have their properties valued using presumptive amounts, likely resulting in a value higher than justified by its operating income and expenses. Except in rare circumstances, it is in the property owner’s best interest to file this report. Such information provided to a county auditor for this purpose is not a public record and may not be obtained by the greater public.
Protecting Your Rights
In some respects, the new law is not clear and may be subject to interpretation by each county auditor until further guidance is given. Therefore, we recommend property owners watch their values carefully and, if necessary, preserve their rights by filing complaints with the county Board of Revision by March 31. Failing to do so may result in being stuck with a much higher tax bill until the following year.