Tax Data Series

REAL ESTATE TAXES: Property Tax Relief, Ten Percent Non-Business Credit, Homestead Exemption Credit and Two and One-Half Percent Owner Occupied Credit Reductions Distributed during Calendar Year 2016 (for Tax Year 2015)

Since 1971, a ten percent non-business credit has applied to each taxpayer’s real property tax bill. It is limited to all real property not intended primarily for use in a business activity. Qualifying property includes property subject to the following uses: farming; leasing property for farming; occupying or holding or leasing property improved with single-family, two-family, or three-family dwellings; or holding vacant land that the county auditor determines will be used for farming or to develop single-family, two-family, or three-family dwellings.

In addition, a two and one-half percent owner occupancy credit of real property taxes is granted on a homestead (a dwelling plus up to one acre) that is occupied by the homeowner.

These credits are limited in that they do not apply to new levies or replacement levies passed after September 29, 2013; they only apply to existing and renewal property tax levies.

Lastly, owner-occupants who are age 65 or older or who are permanently and totally disabled may qualify for an additional reduction in real property taxes by applying for a homestead exemption under Section 323.152(A). Each qualified homeowner is eligible for a credit worth the taxes that would have been charged on up to $25,000 in true value ($8,750 in taxable value). In other words, an eligible homestead worth $100,000 is essentially taxed as if it is worth $75,000. In calendar year 2015, eligibility for new exemptions began being limited to qualifying taxpayers (by age) with Ohio adjusted gross income of $31,000 or less; the income threshold is annually adjusted for inflation. The income threshold for tax year 2016 was $31,500.

The Department of Education reimburses the schools for their share of the tax reductions and the Tax Commissioner reimburses the counties, townships, municipalities, and special taxing districts for their share of the tax reductions. The county auditor also receives three percent of the amount reimbursed under Section 323.152 as payment for administering the homestead exemption and two percent for administering the two and one-half percent owner occupancy credit. Local governments are fully reimbursed from the state general revenue fund for these tax reductions.

Table PD-1 indicates that during calendar year 2016, the Departments of Taxation and Education together reimbursed local governments a total of $1,778.7 million, including $1,138.1 million for the ten percent non-business credit, $429.5 million for the homestead exemption (including $1,157,761 for late-filers), and $211.1 million for the two and one-half percent owner occupancy credit (including $87,823 for late-filers).  Additionally, $17.1 million was paid by the Departments of Taxation and Education to county auditors for administering the homestead exemption ($12.9 million) and two and one-half percent owner occupancy credit ($4.2 million). These administration payments are excluded from the table.