Tax Data Series

REAL ESTATE TAXES: Non-Business Credit, Homestead Exemption Credit and Owner-Occupied Credit Reductions Distributed during Calendar Year 2017 (for Tax Year 2016)

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 $100,00 (market value) is essentially taxed as if it is worth $75,000 (market value). Eligibility for new exemptions is limited to qualifying taxpayers by age and Ohio adjusted gross income; the income threshold is annually adjusted for inflation. The income threshold for tax year 2017 was $31,800. Veterans who have received a 100 percent permanent total disability rating or a total disability rating for a service-connected disability or combination of service-connected disabilities are exempt from this income threshold and are eligible to receive a homestead credit value of $50,000.

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 2017, the Departments of Taxation and Education together reimbursed local governments a total of $1,776.1 million, including almost $1,141.6 million for the ten percent non-business credit, $423.4 million for the homestead exemption (including $78,856 for late-filers), and $211.1 million for the two and one-half percent owner occupancy credit (including $24,319 for late-filers.