How to lower real estate property taxes in Cuyahoga County
One of the most common questions I get is how do property taxes work in Cuyahoga County. How are they calculated, what are they based on and why do they go up. More often then not, Cuyahoga County calculations are correct, but sometimes they are not and property taxes are higher then they should be. But did you know a homeowner can petition to dispute the value of their real property and lower the property taxes if the county overvalued said real property. Keep reading…
Cuyahoga County property taxes are paid for previous year. This means in January 2019 homeowners will pay property taxes for year 2018.
Cuyahoga county treasurer allows several ways to pay property taxes.
Pay full amount in January.
Pay 1st half year taxes (for previous year) in January. Then second half year (for previous year) in July.
Have mortgage lender pay. FHA lenders require this option. In this case, the annual tax amount is divided by 12 months with additional escrow (to cover unexpected property tax increases) and is part of monthly mortgage payment. The lender then sends payment to the county twice a year.
Property taxes will generally stay the same until county does a county-wide re-calculation every six years. If property taxes went up, it is most likely due to voters within a community approving a new levy; or special assessments with the city. Property taxes could also go up with improvements to the house – additions or special improvements that increase property value; for example if a building inspector is out looking at a building permit and notices the home is severely undervalued, he has the right to re-asses.
Fair Market Value for residential homes is calculated via complex process implementing several strategies all at once:
Visual Inspection. Usually a ‘drive by’ evaluation with a possible quick walk-around the home.
Sales Comparison. County’s sold data for specific neighborhood (not radius) using County’s appraisal departments uniquely carved ‘neighborhoods’. See neighborhood maps here.
Marshall & Swift Cost Depreciation Table. A fairly complex system that looks at depreciation taking into account reduction and/or loss in value from all sources. Majority are categorized as curable – the increase in value is equal to or exceeds cost of repair; and incurable – cost of repair surpasses the value it adds to the real property. Among others, Marshall & Swift takes into account:
Physical deterioration – loss in value due to necessary cosmetical updates, ‘wear and tear’ and age of property. Curable, such as paining the property and incurable, such as structurally significant foundation repairs.
Functional obsolescence – outmoded, unacceptable designs that are not in accordance with today’s market standards. Curable – two-bedroom house with additional home office room; adding a closet to home office would make it a three bedroom home. Incurable – tandem (walk-through) bedroom; a four bedroom house, but to get to bedroom #4 one must walk through bedroom #3. Functional obsolescence also applies to an over-improved home for a particular area.
External Obsolescence – loss in value due to negative influences from outside the real property. Proximity to undesirable feature of neighborhood such as backing to an auto-mechanics shop or highway; decline in employment, decline in sales price, etc. Almost always incurable. Read more on Marshall & Swift Depreciation here.
Multiple Regression Analysis. Statistical process used to predict value of a real property based on the value of specific other variables. ‘Other’ variables are value-weighted; respective weights for each are then multiplied by their indicated values and summed to determine a final value for said real property. If I were to oversimplify, I’d explain it like this: there are several potential ‘predictors’ of real property price, like square feet, number of bedrooms, bathrooms, garage, basement, even minor things like a fireplace. Each of these features is value-weighted (some are more important then others) and then plugged into a formula to calculate accurate Fair Market Value.
Taxable real property value is 35% of Fair Market Value. This “taxable value” is called Assessed Value.
The Assessed Value then is applied a city specific tax rate but also takes into account city special assessments, certain credits and/or reductions. I am told by the officials at Cuyahoga County that it would be nearly impossible to clearly calculate the tax rate based on only the city specific rate and the assessed value. Instead, Cuyahoga County provides a “Tax as a Percentage of Market Value” rate for every city within the County. Click here for the list of cities and each city’s rate.
The percentage listed will provide a fairly accurate property specific tax rate within several hundred dollars. Additionally, the county provides residents with this handy property tax calculator. Click here; input fair market value (selling/purchase price) and viola, an estimated property tax.
County’s value of your home should be fairly accurate, but on occasion, the county gets it wrong and the property taxes are unreasonably high. In those instances, a homeowner should file for a dispute.
Contesting your Real Property’s Value
Every homeowner has a right to submit a real property valuation complaint to Cuyahoga County Board of Revision, usually between mid-December to beginning of April. Every homeowner that submits a complaint, will be granted a hearing but the burden of proof is on that home owner.
Official complaints are taken seriously, but as stated above, the county has a very complex process for determining home value, so they expect concrete, clear evidence that the dollar amount they arrived at is incorrect.
There are two ways to file a valuation complaint to the Board of Revisions.
First is to fill out DTE 1 form and mail it in.
Second is to fill out an online application that becomes available mid-December as the County begins to accept applications.
I spoke extensively with several people at Cuyahoga County Treasurers office as well as Board of Revision and here is the advice I was given:
Once you are granted a hearing, bring evidence. The Board of Revisions is confident in the value given by the appraiser’s office; it is homeowners responsibility to prove otherwise.
If house sold within the last 3 years:
- copy of purchase agreement and closing statement (HUD 1)
- evidence of arms-length sale (between two unrelated parties)
- conveyance fee statement.
At the hearing you will be asked simple questions like “How did you find out about the house?”, “Did you know seller?”, “Were there any concessions (seller paid closing costs)?”… The process is easy and county usually grants a fair reduction.
If house did not sell in the last 3 years:
- Independent professional appraisal, authenticated by the appraiser during the meeting. Independent appraisal will usually cost $300-$500 with additional fee for oral testimony at hearing from appraiser.
- Re-financing appraisals may work as well, but I am told in cases that are denied and move on to higher courts, the reason for denial is usually “appraiser not present to give testimony”.
- Sold comparable properties in your specific neighborhood (see County’s neighborhood map here). Pictures to demonstrate cosmetical condition of sold properties vs needed cosmetical remodel and repairs for your home.
- List of necessary repairs. Although the county’s valuation methods do consider depreciation and necessary repairs, it is worth bringing a list of deficiencies, defects and/or necessary critical repairs, with certified contractor estimates. Maybe even several estimates from multiple contractors. The issues cited at the hearing will be compared to general neighborhood condition of homes and may be adjusted accordingly. In other words if homes that are selling in your neighborhood are all updated from studs out and your home still rocks green carpet and 1940s orange kitchen sink and cupboards, the value may be adjusted. Bring very detailed documentation of:
- Physical loss of value – list of necessary repairs compared to the rest of the neighborhood homes. Age of property compared to others; necessary cosmetical repairs/ outdated construction materials, age of roof, windows, structural issues, crumbling retaining walls, water intrusion, age of mechanicals (HVAC), outdated electrical, breakage, etc. Multiple contractor estimates.
- Functional obsolete items – oldest home on the block? Severely outdated design; walk-through bedroom or any other room, all 2nd floor bedrooms with only 1st floor bathroom, outside entrance into basement, front yard pool, absence or significantly smaller yard etc.
- External factors – economic factors, general decline in home values; newly built undesirable neighborhood feature – highway, big box store with parking lot lights shining onto yard, etc. Change in zoning, nearby airport/ flight path, toxic waste, nuclear power plant, ect
- Interior/exterior photos showing why the home is worth less then every other home in the neighborhood
Board of Revision will accept tax year 2018 complaints between December 18, 2018 and April 1, 2019.
We want to know how it will work out for you! Please email us to let us know if we can edit this post to reflect the most up-to date information!
A property tax reduction is also available for properties that were destroyed or damaged during the tax year. Find the form here.
Lastly, Cuyahoga County has just completed a county wide re-evaluation process that is done every six years. Unless a sale has occurred in the last three years, in the spring/summer of 2018, every single home in the county was re-evaluated. Every homeowner has received a re-evaluation notice and a new Fair Market Value. Each homeowner was then given two weeks to submit concerns with a month for appraiser to review those concerns. I am told that with the number of submitted concerns, not all of them were reviewed and offered a response. If that happened, the only way to contest and dispute the new Fair Market Value is to file a complaint with Board of Revisions in beginning of 2019 and/or 2020.