A tax assessor is a public official who determines the value of real property for the purpose of apportioning the tax levy. This is usually done in Ohio from the office of the county auditor. Your actual tax bill will usually come from the county's treasurer's office. In Ohio, you will receive a property tax bill from your county treasurer's office every six months.
It’s important to note that the county will bill you ‘six months in arrears’, meaning that you pay last years property taxes, this year. For example: If you live in a home from January 1, 2007 to December 31, 2007, you will get a tax bill in January of 2008 for the first six months of 2007. In July of 2008, you will get a tax bill for the second six months of 2007. Note that if you pay your July statement and sell your home on September 15, 2008; at closing, you will still owe taxes for the first six months of 2008 plus July, August, and 15 days in September.
For the buyer of this same home, it’s very important to know how the sellers tax bill is reconciled at settlement. The escrow officer will NOT actually pay the county treasurer's office as many buyers think. The escrow officer will calculate the taxes the seller owes (in our example, from January '08 thru August '08 plus 15 days in September). He will then deduct the seller's tax bill from the seller’s proceeds of the sale and credit the buyer this same amount. This transaction will clearly be shown on the HUD-1 statement given to both the buyer and seller at closing. The HUD-1 statement outlines by whom, or to whom, every penny in the transaction is paid or earned.
After the buyer takes possession of the house he will receive his first property tax statement in January of 2009. That statement will cover the first six months of 2008. Because the buyer, you, didn't move into the house until September of 2008, you may think a mistake has been made and assert, "The seller should already have paid these taxes!" He did pay them. He paid you. You were credited the taxes owed for this period at closing. You, the new owner, must now pay this bill when it actually comes due. Because many buyers don't have a clear understanding of the procedure, they are caught short of funds. Make sure your closing agent explains in detail how property taxes are handled, and what your responsibilities are.
If your taxes are included in your monthly mortgage payments, your lender will keep the tax portion of each payment in an escrow account sometimes called an impound account. The actual tax bill goes to and is paid by the lender. The homeowner will receive an annual summary statement from the treasurer. This can be used to claim your property tax deduction if you itemize your federal tax return.
The actual assessment of individual real property is done by an appraiser called an assessor. How much you owe depends on the taxable value of your property. In Ohio, it is typically 35% of what the tax appraiser says is fair market value of the land and all the improvements. Fair-market value reflects the quality of your property and what similar properties in the neighborhood have recently sold for.
Assessments are renewed in most jurisdictions, usually, at 3, 4, or 5 year intervals. The new assessment can be appealed by the individual property owner and will made subject to an administrative or judicial review. Your actual tax bill will be determined by applying the tax rate to the assessed value, plus levies approved by voters in the jurisdiction. The tax rate can vary from community to community and from school district to school district within the same county. The taxes collected pay for schools, police, fire stations, hospitals, garbage disposal, sewers, road and sidewalk maintenance, parks, libraries, and various other miscellaneous public service expenditures. Levies are stated in mills. A mill is $1.00 per $1,000 in assessed property value.
Periodic revaluation of property taxes answers the question of owners of new homes paying taxes on outdated values, however it creates the situation of older retired owners on fixed incomes facing steady increases in property value with tax payments they can't manage. For this purpose, Ohio and other states have established a Homestead exemption which limits the yearly increase in property tax so that owner-occupants are not "taxed out of their homes". Further, the State of Ohio reimburses school districts and local governments for the amount of revenue taxpayers save through the homestead exemption. Your local governments and schools do not lose out.
Note: You will not automatically receive a homestead exemption. You have to apply for it. See. "Why didn't I receive the Homestead Exemption?"
By law, in Ohio, a 10% penalty is assessed on unpaid property tax balances after each collection period and interest is charged on unpaid balances from previous years. At the end of each year, properties with past-due tax liens may be certified delinquent. The treasurer may then sell these delinquent liens for the amount of the taxes owed. The person who buys the lien will then try to collect from the owner of the property, and has the legal right to foreclose on the property if the money cannot be collected.
During the appeal you will required to prove your case by producing comparable home sales that support your claim. This can be done via a certified appraiser or by using a knowledgeable REALTOR to bring you a Broker's Price Opinion. Under no circumstances go into the appeals hearing armed only with a value opinion that you have downloaded from some web AVM source.
See >> Real Estate Guide: Selling Your Home (Market value) - Can I find out the value of my home through the Internet?
From time to time, as an owner, you may find that your tax bill is subject to a special assessment for such things as sidewalks, street lighting, or sewers. This assessment will be over and above the regular tax bill and will be assessed for a specified period of time.
When a Homestead property is sold or otherwise transferred the exemption is extinguished and the tax on the property will rise significantly. You should disclose the fact that you are Homestead Exempt to a buyer, should you decide to sell your property.
A smaller percentage is allocated to municipal or township governments, with about two percent going to locally-approves levies, such as police and fire districts and public transit. The remaining funds are shared by voter-approved levies for parks, libraries, children's services, mental health facilities and more.
The 1997 ruling gave the Ohio General Assembly a year to overhaul the funding system and reduce the reliance on local property taxes. As of 2008, the General Assembly has done little to rectify the status quo, and the 'system' remains unconstitutional - a 'mandate' with no legal remedy. (Note: In 2003, the U.S. Supreme Court declined to hear the case. Some jurisprudence experts say that this effectively ended the argument against the use of property taxes for school funding.)
An impound account is a trust (escrow) account established by the lender to hold money to pay for real estate taxes, and mortgage and homeowners insurance premiums as they are received each month.