Is it "common" to get taxes reduced?

Question

I am looking to buy my second duplex in Cleveland. Taxes in the "Heights" cities are high. Is it too rare to have taxes reduced? What I mean is that some properties that are listed around $100,000 have taxes as high as $5,000. That is way more than what the this publication says. Is it possible to contest the taxes and have them reduce according to purchase price?

Thanks in advance,

Miguel

Thanks in advance,

Miguel

Federico Gutierrez · Answer

You need to look at the auditors website and see how much its tax value is.IF you are buying it for less than the tax value you have a strong case, assuming you bought the property in an arms length transaction and it was not a distressed property. IF those conditions are meant you should be good long as you provide supporting docs, purchase agreement and HUD-1.

Bob Collett · Answer

Of course the desire for better cash flow is not grounds to win a complaint before the board. Get your realtor to run comps, and show the true value of your property. The folks on the board do this every day, so they will not be fooled... but they are fair, and if the fair market value is truly less than the stated tax value, then you will win.

James Wise · Answer

Just go to the county auditor site for tax info.

Miguel Nava · Answer

Thanks for the reply Bryan. That is good to know.

Miguel

Bryan Blankenship · Answer

As long as there is good justification, I win 75-85% of the tax disputes I file on my own properties in Ohio every year.  As long as it's a true sale, arms length, it is usually easy.  Even easier if it was MLS listed and not off market as you have more history and proof to say "See, it was listed for $69K for 45 days and no one bought it.  I paid $55K for a reason - THAT is its true value!"

Vince Lucas · Answer

@Miguel Nava I can understand the frustration with high property tax especially when the county has the assessment too high. Each city has a different tax rate based on assessed value. Cleveland Heights is 4.09%. So if assessment was $100,000 the property taxes would be $4,090. Sometimes if they do not change value to where you think/it should be, you can provide an unbiased appraisal that support the market value of the property. I have a PDF of what each city in Cuyahoga and Lake county charges for property tax, feel free to reach out if you would like something like that or have any other questions about the Cleveland market.

Miguel Nava · Answer

Thank you very much! I will look into that. I totally agree, it is a better option to let the experienced professionals handle that. I actually did some work for one of those firms that contest property taxes, back when I first got my license. I (mainly) helped them workings on the comps.

Miguel

P.J. Bremner · Answer

@Miguel Nava

I am actually working with the same law firm that @Nicole Heasley had suggested and so far they are really on top of things.  We are filing shortly and should have taxes reduced significantly on 2 out of 3 of my recent purchased.  One property was purchased for $27,500 with a county tax assessed value of $140k and taxes of $9,500 (OUCH lol) and the other property purchased at $84k with the county tax assessed value of $135k and taxes of $4,500.  I am expecting more than half reduction on the first and less than half on the second, which is night/day difference in my cash flow.  The plan is to ride out the reduction in taxes and 1031 exchange when the city raises the taxes high enough to where my ROE would be better elsewhere.

As for the cost of using this law firm - it's only 1/3 of the first year's savings.  It's true that I could file for them myself, but at what cost?  The city will be looking for every reason to not reduce and issue a refund, so any mistake will cost me thousands of dollars.  By letting people with experience handle it, I'm nearly guaranteeing myself a return for not only the first year, but several years to come.

Miguel Nava · Answer

Thanks for the reply James! I found this site with info on tax rates, but apparently they are not accurate. That is the reason tax charges are higher than my estimations.

Miguel

Is it "common" to get taxes reduced?

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