Navigating the Surge in Property Taxes: Understanding and Appealing Real Estate Taxes in Montgomery County, Ohio

Montgomery County, Ohio, is witnessing a historic increase in property values, a trend that is sending ripples through the community. As reported by the Dayton Daily News in July of 2023, residential property values are expected to see an average increase of 34%, and commercial properties by 12%. Montgomery County is also bracing for an unprecedented $8.5 billion rise in overall value. In 2022, 83% of properties sold for a higher price than the county’s current value. Although the increase in value reflects an exceptionally strong real estate market, it also directly correlates with an increased tax burden for property owners, both residential and commercial. Montgomery County estimates taxes will increase 4-6%, on average, because of this property value update. Understanding the available options for challenging these assessments is crucial for those impacted by this surge.

In Ohio, property values are reappraised by county auditors every six years, with an update every third year. The 2023 tax year marked a reappraisal year for 28 Ohio counties, including Montgomery County. Property owners can challenge these valuations once in each three-year cycle by filing a "Complaint Against Valuation" with the county Board of Revision (“BOR”), though under certain circumstances a property owner may qualify for a statutory exception to file more than once in a three-year cycle.

The BOR is a three-person administrative board that includes representatives from the County Treasurer, County Auditor, and Board of County Commissioners offices. RC 5715.19(A) who establishes jurisdiction and who has standing to bring a complaint before the BOR. For example, a property owner or spouse, appraiser or broker, and a tenant of a property have standing to bring these complaints; however, a tenant only has standing if all of the following are true: (i) the property is commercial or industrial for tax purposes (ii) they are required to pay all the property taxes under their lease, and (iii) the owner authorizes the tenant in bringing the valuation complaint. In addition, a trustee may bring a challenge on behalf of property owned by a trust.

The complaint process must be initiated between January 1st and March 31st of each year, and the hearings typically occur in the summer and fall. It is important for property owners to present strong evidence to support their case, as the burden of proof lies with the party who filed the valuation complaint. To prepare for the appeal, evidence such as independent appraisals, photographs, sales data of comparable properties with appropriate adjustments, and other relevant information should be gathered. During the hearing process, the complainants presents their cases and are subject to questioning under oath by the BOR (and possibly by counsel for the local Board of Education). In Montgomery County, the hearings generally last between 10 and 20 minutes per property but may be longer in more complex cases such as commercial tax appeals supported by appraisal evidence and testimony. All hearings take place remotely via Zoom. If the BOR changes a property’s value, that change will be effective as of January 1 of the tax year under appeal (and thus, will apply to that entire tax year).

Property assessment is not an exact science — especially for commercial property. Location is usually the foremost factor when evaluating commercial real estate. This can allow surrounding properties to affect tax bills substantially, especially in rapidly developing areas. Triennial assessments can be questionable since they are generally based on statistical analysis. Nevertheless, these adjustments can have a very real impact on a property owner’s bottom line.

By Jordan P. Staley, Esq. Coolidge Wall Co., LPA staley@coollaw.com

School districts (also referred to as Boards of Education) generally receive approximately 40% of all property taxes collected meaning they are one of the political subdivisions most affected by reductions in value. Owners should be aware when filing a complaint that the local school district will likely receive a copy as part of its routine public records requests and could get involved if the reduction sought is greater than $50,000 in market value. The process may become adversarial and, in many ways, resembles a trial. If the school district decides to become involved with the owner’s case, its attorneys may cross-examine the owner (and the owner’s witnesses) at the BOR hearing and present contrary evidence of the property’s value.

Following the hearing, the BOR will issue a decision. If the property owner disagrees with this decision, they may appeal to the Ohio Board of Tax Appeals or the county common pleas court. While the process can be lengthy, a successful appeal may result in a reduction of future property taxes, aligning them more closely with the fair market value of the property.

Recent legislative changes in Ohio have significantly affected property tax appeals. House Bill 126 changed school districts’ ability to file complaints regarding property values. Historically, school districts had broad discretion to file complaints attempting to increase the market value of properties. However, in 2022 House Bill 126 limited this ability. School districts may now only file an appeal if it is based upon a sale transaction where the price exceeded the county auditor’s market value by at least 10% and by more than $500,000. Additionally, school districts are no longer permitted to appeal any unfavorable BOR decisions to the Ohio Board of Tax Appeals, though some school districts are attempting to seek judicial review of BOR decisions through filing a Chapter 2506 administrative appeal in the local county common pleas court.

Many school districts have questioned the validity of House Bill 126, raising arguments that House Bill 126 violates the Ohio and Federal constitutions’ equal protection and due process clauses. School districts including but not limited to Columbus, Hilliard, Licking Heights, South-Western, Westerville, and Worthington have joined recent lawsuits. Essentially, they argue that the law greatly limits their ability to seek increases or oppose decreases in property values for tax purposes, which is their right under the law. Other critics argue that the law is not functioning as it was meant to and encourages creative legal efforts to get around the rules. Despite these challenges, House Bill 126 is nonetheless law.

The surge in property values and the subsequent increase in taxes in Montgomery County underscore the importance of being well-informed about the tax appeal process. For property owners facing unexpectedly high taxes, an appeal can offer a viable path to a fair reassessment.