Anyone familiar with property taxes in the Cleveland area?

7 Replies

I'm currently looking to buy a house in the Cleveland area that has some massive cash flow potential but it seems the property taxes just dropped 45% this last year. For the last 10 years or so the property taxes were around $2,500 a year but last year they dropped to about $1,500. This will be my first investment property and I just bought my first primary residenceast year so I'm not quite sure how taxes work yet. Is this a red flag that the taxes could double in the near future? What is a typical reason for such a drastic decrease? My concern is that the property taxes will only be at this level short term and then go back up and ruin the cash flow. Thanks

I'm sure someone else here can weigh in, but I believe 2018 taxes are being reassessed across the city, which happens every 3 years. Values have gone up so it's likely that your taxes will rise to reflex that. 

The previous owner could have disputed the taxes with the county and had them brought down, so you might be right in that they will go right back up again. Taxes from suburb to suburb vary drastically there, so this will also depend which part of town you're in. 

@Eric H.

Taxes in Cleveland are different in different areas. You can have taxes at one rate in the 44105  zip code where Slavic Village is.....and then in Newberg Heights, (same zip code) they can be over twice as  much. When you go to Zillow you can see what the taxes are for that particular property and help that be your determining factor.

Depends on the house as well. 

For example in my neighborhood in Leander, TX. our house sits right next to another house that is the exact same floor plan, sq. ft, built same year, etc. 

Our house according to the county is valued at $211,000 while the other house is valued at $191,000. I pay $5,300 in taxes while they pay $4,700.

Why? Curb appeal. 

Our house is well maintained and has nice landscaping, trimmed trees, lush cut green grass, while the other house is over grown with trees, house needs paint, rain gutters are falling down, garage door all dented up, the lawn is never mowed and on and on. 

Cleveland area taxes generally vary between 1.8 to 4.3% of retail value and usually change after a purchase.  I would guess that you probably purchased your property at a much cheaper price point than the previous owner.   Check out clevelandhousehunt.com for a list of all the tax rates in the Cleveland area.

Originally posted by @Eric H. :
I'm currently looking to buy a house in the Cleveland area that has some massive cash flow potential but it seems the property taxes just dropped 45% this last year.

For the last 10 years or so the property taxes were around $2,500 a year but last year they dropped to about $1,500. This will be my first investment property and I just bought my first primary residenceast year so I'm not quite sure how taxes work yet.

Is this a red flag that the taxes could double in the near future? What is a typical reason for such a drastic decrease? My concern is that the property taxes will only be at this level short term and then go back up and ruin the cash flow.

Thanks

 Most everything you need to know about the taxes on a particular property can be found on the Cuyahoga County Auditor website.

We see a lot of investors apply to have property taxes lowered based on purchase price.  If your buying it for more then the tax value, be aware that they county may raise those taxes based on the increased sale price.

The previous owner of the parcel probably challenged the market value based on a recent, lower purchase price.

Property taxes in Cuyahoga County are determined by the fiscal officer's assessed value and the community tax rate based on levies that are passed by taxpayers. 

You can find the community rates listed here: https://treasurer.cuyahogacounty.us/en-us/communit...

This is a calculator for taxes by community. I don't know how reliable it is because there are multiple taxing districts in a few municipalities that significantly affect the rate. https://smartasset.com/taxes/ohio-property-tax-cal...

As a rule, taxes are assessed based on the market value of the parcel, which is most accurately determined by the most recent purchase price. Every three years, the fiscal officer analyzes the aggregate sales for a neighborhood and applies a percentage rate change based on the sales trend of an area. For example, I bought a house for $6,200 in 2015, and the following year the market value of the parcel dropped to $5,800.

If the purchase price of the house is lower than the market value on the tax duplicate, the owner can challenge the tax valuation at the Board of Revision and have it lowered immediately.

It should be noted that the fiscal officer doesn't do a very good job of actually appraising each parcel individually, so they won't automatically lower the value based on the new purchase price. That $6,200 house above was valued at $85,000 before I bought it.