Tax Rules: Final: 5703-25
5703-25-07 Appraisals
(A) Each general reappraisal of real property in a county
shall be initiated by an entry and order of the tax
commissioner directed to the county auditor of the county
concerned which shall specify the time for beginning and
completing the appraisal as provided by section 5715.34 of
the Revised Code. In January of each year the commissioner
shall adopt a journal entry wherein is set forth the status
of reappraisals in the various counties and the tax year upon
which the next reappraisal and the next triennial update of
real property values in each county shall be completed.
(B) Each lot, tract, or parcel of land, and all buildings,
structures, fixtures, and improvements to land shall be
appraised by the county auditor according to true value in
money, as it or they existed on tax lien date of the year in
which the property is appraised. It shall be the duty of the
county auditor to so value and appraise the land and
improvements to land that when the two separate values for
land and improvements are added together, the resulting value
indicates the true value in money of the entire property.
(C) Land shall be valued in accordance with the provision of
rule 5703-25-11 of the Administrative Code. All land shall be
valued according to its true value except where the owner has
filed an application under section 5713.31 of the Revised
Code for such land to be valued for real property tax
purposes at the current value the land has for agricultural
use, and the land is qualified to be so valued and taxed as
provided in section 5713.30 of the Revised Code.
Buildings, structures, fixtures, and improvements to land
shall be valued in accordance with the provisions of rule
5703-25-12 of the Administrative Code.
(D) In arriving at the estimate of true value the county
auditor may consider the use of any or all of the recognized
three approaches to value:
(1) The market data approach - The value of the property is
estimated on the basis of recent sales of comparable
properties in the market area after allowance for variation
in features or conditions. The use of the gross rent
multiplier is an adaptation of the m-arket approach useful in
appraising rental properties such as apartments. This is most
applicable to the types of property that are sold often.
(2) The income approach - The value is estimated by
capitalizing the net income after expenses, including normal
vacancies and credit losses. While the contract rental or
lease of a given property is to be considered the current
economic rent should be given weight. Expenses should be
examined for extraordinary items. In making appraisals by the
income approach for tax purposes in Ohio provision for
expenses for real property taxes should be made by
calculating the effective tax rate in the given tax district
as defined in paragraph (E) of rule 5703-25-05 of the
Administrative Code, and adding the result to the basic
interest and capitalization rate. Interest and capitalization
rates should be determined from market data allowing for
current returns on mortgages and equities. The income
approach should be used for any type of property where rental
income or income attributed to the real property is a major
factor in determining value. The value should consider both
the value of the leased fee and the leasehold.
(3) The cost approach - The value is estimated by adding to
the land value, as determined by the market data or other
approach, the depreciated cost of the improvements to land.
In some types of special purpose properties where there is a
lack of comparable sales or income information this is the
only approach. Due to the difficulties in estimating accrued
depreciation, older or obsolete buildings value estimates
often vary from the market indications.
(E) Ideally, all three approaches should be used but due to
cost and time limitations, the cost approach as set forth in
these rules is generally an appropriate first step in
valuation for tax purposes. Values obtained by the cost
approach should always be checked by the use of at least one
of the other approaches if possible. In the event the auditor
uses approaches of estimating true value other than the cost
approach appropriate notations shall be shown on the property
record.
(F) The appraiser is urged to refer to standard appraisal
references as well as the excellent publications by many
trade associations, etc., which provide valuable income,
expense, and other types of information that may be used as
bench marks in making the appraisal.
(G) Nothing set out in these rules shall be construed to
prohibit the county auditor from the use of advanced
techniques, such as computer assisted appraisals, in the
application of the three approaches to the appraisal of real
property for tax purposes. However, such programs must be
submitted to the tax commissioner for the approval on an
individual basis.
Effective: 9-18-03
Promulgated under: 5703.14
Authorized by: 5703.05
Amplifies: 5713.01, 5715.01
Prior effective dates: 12-28-73, 11-1-77 as 5705-3-03