Columbus Property Tax increase Ouch!!

Multi-Family and Apartment Investing
6yFollow

Columbus Property Tax increase Ouch!!

Angela Yan
Rental Property Investor · San Francisco, CA · Member since 2017 · 206 posts · 138 votes

Hi!  Just bought my Multi in 2018 and now just got my adjusted tax bill.  It went from $$$$ to $$,$$$.  Almost 2.5 folds.  I guess assessor went on purchased price of the property.  Anyone tried fighting this?  I was told by some not much they could do.  Thank god I pushed rents and forced some appreciation but there went all my profits.  Ouch!!! 

4Reply
73 views

Most Popular Reply

Darius Ogloza
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y

From a fellow Californian: God save Proposition 13.

4Reply
See this reply in the discussion

26 Replies

Jump to latestLatest
  • Erik Hatch
    Rental Property Investor · USA · Member since 2018 · 325 posts · 222 votes
    6y

    What size multi @Angela Yan ?

    1Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y

    At this point, you can always file an appeal. They are free to file in Ohio. 
    you will need an appraisal to show that the value is not what the county says. If it was for the price you paid, you essentially will need to show it was not worth what you paid for it for a number of reasons.

    it is certainly easier to contest when you do not have a purchase agreement for the assessed value. However if you can get a new appraisal and argue that since you took control of the property there are changed circumstances to show the decrease in value, you will have a case. For example, if you have a 12 unit building and one month after taking over 3 tenants move out because of a flooding or mold issue that needs to be remediated and you have not been able to take care of the building yet, that would justify a decrease in taxable value. 

    2Reply
  • Account Closed
    Investor · Ormond Beach, FL · Member since 2019 · 78 posts · 73 votes
    6y
    Hello @Angela Yan Ohio is a "mark-to-market" state with respect to assessments. Upon a sale, state law requires the assessor to increase the assessed value, or fair market value (whichever is used to calculate your RE tax obligation) to 100% of the recorded purchase price. I think you can mitigate the impact to a degree by assigning part of the purchase price to the asset's personal property and record the transfer of the personal property separately. I am not sure, however, if you can still do this if the sale has already closed, or if sale has already been recorded with the county (in your case, sounds like both have occurred).
    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Angela Yan This happened to all of my properties in Columbus, Ohio as well. I submitted appeals for all of them and lost as well. The thing that sucks is you have to pay the difference in the taxes from the time you purchased your property. A lot of new investors do not realize this when they are purchasing properties here.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    2Reply
  • Ari Lasky
    Beachwood, OH · Member since 2018 · 24 posts · 27 votes
    6y

    @Remington Lyman does anyone know if a cost segregation study was successful in mitigating this real estate tax issue? By reallocating a portion of the purchase price to personal property/land improvements?

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Ari Lasky I do not know.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    1Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    From a fellow Californian: God save Proposition 13.

    4Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Truly, one of the great hazards of out-of-state investing is encountering the different property tax schemes in the far-away states.  For example, like you, I learned too late that the property tax in New York reported on most websites is the county tax and not the much larger and separately assessed school tax you have to pay in that state.  All of my assumptions had to go out the window.   

    2Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y
    Originally posted by @Ari Lasky:

    @Remington Lyman does anyone know if a cost segregation study was successful in mitigating this real estate tax issue? By reallocating a portion of the purchase price to personal property/land improvements?

    While helpful as evidence of value, An appraiser will carry the most weight. You have to remember that the appraisal that you pay for is going to have information that you know about in the county does not when determining true value. The counties tools for appraisal do not take into account the income of the property nor do they take into account the condition of the property, and that is for you to point out with your appraiser.

    I know in other counties in Ohio having a true appraisal, Carries much more weight then whatever the county can provide. I also recognize that the school board in Franklin County tends to be overly greedy, and contest things and often times is tough to work with. I don’t have direct experience of this but I’ve heard that in the past

    2Reply
  • Angela Yan
    OP
    Rental Property Investor · San Francisco, CA · Member since 2017 · 206 posts · 138 votes
    6y

    When I was getting letters in the mail that there is going to be an assessment, I did reach out to my property manager for her input. She sent me to her attorney that handled this kind of thing and this attorney pretty much told me most likely not much to do and most likely won’t win. 

    Franklin County has been tough as they suffered some down turns when their RE district had such low value collecting years of low taxes. Luckily the city is revitalizing a community and cultural center so I am expecting the values of my properties to go up. 

    Yes! God bless Prop 13 in California however I see this necessary or many Californians will be priced out or possibly loss their home if taxes adjust at drastic appreciating markets. 

    Meanwhile I have already raised rents on my units $50 to $150 per unit. One of my 4plex value already jumped to almost $100k since I bought it. Let’s hope momentum holds in Columbus. 
     

    1Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y
    Originally posted by @Remington Lyman:

    @Angela Yan This happened to all of my properties in Columbus, Ohio as well. I submitted appeals for all of them and lost as well. The thing that sucks is you have to pay the difference in the taxes from the time you purchased your property. A lot of new investors do not realize this when they are purchasing properties here.

    The key in Ohio is structuring the purchase agreement to minimize the tax hit. Overall, Ohio is a property owner friendly state. Although, Franklin, summit and Cuyahoga counties tend to be the most aggressive in Fighting property owners for tax revenue. Hamilton and Macgomery County’s tend to be more laid-back on those matters. Ultimately, the goal is to structure of the purchase agreement in such a way to allow you the maximum leverage to fight any challenge to your increased taxes

    2Reply
  • Angela Yan
    OP
    Rental Property Investor · San Francisco, CA · Member since 2017 · 206 posts · 138 votes
    6y

    @John Lenhart thanks for the valuable insight. Going forward next time, what are some of the ways people structure deals to avoid such a hit in taxes? 

    0Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y
    Originally posted by @Angela Yan:

    @John Lenhart thanks for the valuable insight. Going forward next time, what are some of the ways people structure deals to avoid such a hit in taxes? 

    In Ohio, you can still do the entity transfer, with the caveat that the school districts, especially in Franklin Cuyahoga and Summit Counties are aggressive in trying to uncover these transactions. 

    You can also do a structured sale where you carve out a chunk of the transaction as personal property. There is no personal property tax in Ohio so anything as personal property does not get assessed for real estate  Valuation

    1Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    I purchased a piece of acreage once that had been on the market for over a year. (had newspaper ads to prove it) It was subsequently tax assessed at significantly more than what I paid for it (paid ask) and I contested it all the way to the state tax tribunal and lost. Essentially, it came down to that "what it sells for on the open market doesn't determine a value. We value it at whatever we want and too bad for you". That isn't their exact wording but that's the gist of it. Held that property for 26 years and just recently sold it. That was Michigan by the way. I left that state.

    1Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y
    Originally posted by @John Teachout:

    I purchased a piece of acreage once that had been on the market for over a year. (had newspaper ads to prove it) It was subsequently tax assessed at significantly more than what I paid for it (paid ask) and I contested it all the way to the state tax tribunal and lost. Essentially, it came down to that "what it sells for on the open market doesn't determine a value. We value it at whatever we want and too bad for you". That isn't their exact wording but that's the gist of it. Held that property for 26 years and just recently sold it. That was Michigan by the way. I left that state.

    Each state has their own rules on the matter. In Ohio FMV is baked into the statute so there is not much wiggle room for the county assessor on that end

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    Here in Georgia, a property is taxed at the sale price the year after the sale. Then it can revert to whatever assessment is assigned it.

    1Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    6y
    Originally posted by @Angela Yan:

    Hi!  Just bought my Multi in 2018 and now just got my adjusted tax bill.  It went from $$$$ to $$,$$$.  Almost 2.5 folds.  I guess assessor went on purchased price of the property.  Anyone tried fighting this?  I was told by some not much they could do.  Thank god I pushed rents and forced some appreciation but there went all my profits.  Ouch!!! 

     We can refer you a law firm in Columbus,OH  that can help you challenge if the difference is substantial enough.  You can also fight them on your own and pull comps that are more favorable to you. 

    [email protected]786-494-6766
    Section 8 Launch52 Reviews
    WebsiteView Page
    1Reply
  • John Manner
    Member since 2019 · 17 posts · 13 votes
    6y
    Yeah, one of mine went up 120%! I asked if they would decrease it that much if the economy turned and I at least got a chuckle. Since they go off the sale price there isn't much wiggle room.
    1Reply
  • Angela Yan
    OP
    Rental Property Investor · San Francisco, CA · Member since 2017 · 206 posts · 138 votes
    6y

    Just spoke with the tax office and they allure to that 2020 will most likely go up as well.  Pretty greedy.  

    0Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y
    Originally posted by @Darius Ogloza:

    From a fellow Californian: God save Proposition 13.

     Prop 13 saves you going forward from your purchase date. But all properties get reassessed to the new purchase price.

    People in CA were successful in petitioning to lower assessed value during and since the crash, but not for new purchases. 

    You have to show the current assessed value is way off from market value. 

    0Reply
  • John Lenhart
    Rental Property Investor · Cincinnati, OH · Member since 2017 · 258 posts · 207 votes
    6y
    Originally posted by @Angela Yan:

    Just spoke with the tax office and they allure to that 2020 will most likely go up as well.  Pretty greedy.  

     In Ohio every three years they have to do a reevaluation and I believe 2020 is the year for that to happen. However, since they likely already marked your property up to purchase, chances are it probably will not go up again just yet. Unless the purchase price is already considered a polo market bargain,  The valuation will likely not increase. However, that does not mean that the millage Will not increase, and if a school levy or other tax assessment was passed recently, your taxes will go up regardless of valuation

    3Reply
  • Dan A.
    Investor · CA · Member since 2012 · 44 posts · 8 votes
    5y

    Does anyone know what is the property tax rate is as a % of sale price? According to smartasset.com, it's 3.44% in Franklin County. Is that accurate? Seems like it would be pretty tough to make any $ if that was indeed the case. 

    0Reply
  • Wendy Cicek Steiger
    Aptos, CA · Member since 2020 · 2 posts · 2 votes
    3y

    We just had our taxes go up almost 400%. Supposedly because the back taxes “follow the property” not the owner. So we are now required to pay education taxes for before even owning the property. We essentially had to go to a zoom trial, and were essentially told “too bad you lose.”  We have not lost any income potential from the property.  I am from Ohio originally and I will never buy investment property in the state again.

    1Reply
  • Zachary Ware
    Member since 2022 · 405 posts · 455 votes
    3y

    Seeing the same issues here in Texas. Not much you can do about it from what I understand.

    0Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    3y

    @Zachary Ware it's not the same as an increase in property taxes/assessed value. In parts of Ohio, they will go back several years and make you pay "back taxes" based on what the newly assessed property value should have been. It doesn't matter if you owned the property then or not - you own more because they decide that it should have been a higher tax value. 

    I may be wrong, but I have not seen that sort of activity in Texas. You pay more if the value goes up on your annual assessment, but they don't say, "Oh, my bad, we should have charged you more 5 years ago. You owe that to us now. Never mind the fact that you did not own the property then." 

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free