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Can Refinancing Real Estate Lead to Hidden Tax Savings?

May 15, 2017

 

DID YOU REFINANCE YOUR OHIO REAL ESTATE RECENTLY?


If you’ve refinanced your commercial real estate, your investment property or your personal residence located in the State of Ohio recently, do yourself a favor and request a copy of the bank appraisal.

 

This can be more complicated than it sounds.

 

If the lender orders the appraisal of your real estate, the appraiser is likely contractually bound not to talk to you about the appraisal, her process, or her opinion of value. Moreover, even though you might have paid for the appraisal report in your refi costs, the bank controls the appraisal report. 


The Ohio Department of Commerce has this suggestion: “Sometimes a mortgage broker or lender will require a borrower to pay for the appraisal. If the borrower has paid for the appraisal, the consumer is entitled to a copy and the lender or mortgage broker can provide the consumer with directions for doing so. Remember, it is always best to make such a request in writing.”

 
If your refinancing appraisal report concludes to an opinion of value that is lower than your County Auditor’s valuation, then you should consider filing a complaint to challenge the County’s value. Before doing so, you should consider consulting an experienced professional to determine if seeking a reduction in value is appropriate in a specific instance. There may be instances where it is not advantageous to seek a change in value. There may be instances where a refinancing appraisal report concludes to more than one opinion of value given different sets of assumptions.


However, when appropriate, the valuation reduction complaint process can pay off for real estate owner in significant tax savings. This is especially true if you file the valuation complaint with your County Board of Revision in the first year of your County’s three-year period.

 

Here’s a list of Ohio counties that are in the process of reappraising the value of ALL of the real estate in their county for the 2017 Tax Year:


2017 REAPPRAISAL COUNTIES


AUGLAIZE, CLINTON, DARKE, DEFIANCE, DELAWARE, FRANKLIN, GALLIA, GEAUGA, HAMILTON, HARDIN, HARRISON, HENRY, JACKSON, LICKING, MAHONING, MERCER, MORROW, PERRY, PICKAWAY, PIKE, PREBLE, PUTNAM, RICHLAND, SENECA, SHELBY, TRUMBULL, VANWERT and WOOD. Full list here: https://goo.gl/4pQ4HF


When a County “reappraises” the real estate, it is undertaking a complex review of the values for each individual parcel of real estate. Commercial properties are typically visited in person whereas residential properties get less parcel-specific attention. 


Ohio law also requires that counties adjust the values of their real estate three years after a full reappraisal occurs.

 

The Ohio Department of Taxation states: “According to state law and department rules, auditors conduct a full reappraisal of real property every six years and update values in the third year following each sexennial reappraisal.” 


For instance, Montgomery County, OH real estate was fully reappraised for tax year 2014. The TY 2014 values typically controlled (i.e., “carried forward”) for the 2015 and 2016 tax years.  According to Ohio law, Montgomery County, OH officials have to adjust those TY 2014 values for tax year 2017. Here’s a list of all Ohio counties’ that are in the process of adjusting the values that were set three years ago:


2017 UPDATE COUNTIES


ASHLAND, ASHTABULA, ATHENS, BUTLER, CLERMONT, FULTON, GREENE, KNOX, MADISON, MONTGOMERY, NOBLE, SUMMIT, and WAYNE. Full list here: https://goo.gl/4pQ4HF

 

CALL OR EMAIL WITH ANY QUESTIONS

 

Feel free to contact my office to see if you have a case. I offer a free consultation and review of your property. In addition, I offer hourly, contingent, and flat fee payment arrangements depending on the nature of your case, its complexity and risk.

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May 15, 2017

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