Tax value of homes likely to be sliced

A 2,430-square-foot Dublin house just across the street from the Country Club at Muirfield Village is appraised by Franklin County at $366,400.  

Involved in a foreclosure, the house at 7815 Knickers Court was put up for sale by a trust in October 2009 for $287,500, 22 percent below its appraised price. And there it had sat.  

Its sale closed last week for $215,000, 41 percent less than its tax value, said Joe Armeni, the broker at RE/MAX City Center who sold the house. That’s low even for a house that needed tens of thousands of dollars in work, he said.  

Franklin and Delaware counties probably will lower the tax values of many homes this summer because the two are among the most over-appraised of the 41 Ohio counties that must reappraise properties in 2011.  

“We are anticipating reductions somewhere between 5and 10 percent,” said Delaware County Auditor George Kaitsa.  

Even if you get a reduction in your house’s tax value, it doesn’t necessarily mean that your tax bill will drop. That depends on how your home compares with other properties in your taxing district.  

The median tax value in Franklin County was 102percent – meaning 2 percent higher than what properties sold for in the first six months of 2010. That ranked fourth-highest in an Ohio Department of Taxation study. Delaware County was at 101.7percent, putting it at No. 5.  

Medians that high are almost unprecedented in recent decades. That “makes it entirely appropriate for (those) county auditors to lower appraisals,” said John Kohlstrand, spokesman for the Ohio Department of Taxation. “It shows how soft real-estate values have been in the last three years.”  

Historically, reappraisals increase assessments to keep pace with rising values, with the state prodding auditors to get the medians at least above the 90 percent level.  

“We’ve not seen this, at least in my lifetime,” said Tony Frissora, chief of staff to Franklin County Auditor Clarence Mingo and the former head of the auditor’s real-estate division.  

For one house, 102 percent would mean the appraisal was pretty accurate – a tax value of $102,000 on a house that sold for $100,000, for example.  

But being that high on median means that half of the homes are appraised at more than 102 percent, Kohlstrand said. On a natural bell curve, those at the high end are paying way more than their fair share of taxes.  

That’s why the state generally encourages auditors to get their county medians to between 92 percent and 94percent, to lessen the likelihood that properties are appraised too high, Kohlstrand said.  

The gap between sale prices and appraisals is simply a reflection of the downturn in the real-estate market, and that changing market is why counties do reappraisals, Mingo said.  

“The reappraisal is the remedy,” he said.  

Then-Franklin County Auditor Joe Testa decided in 2008 to forgo a neighborhood-by-neighborhood update. Mingo doesn’t think that resulted in appraisals being more incorrect today, because the market downturn was just beginning.  

Testa will take over the Department of Taxation in January, appointed by Gov.-elect John Kasich.  

Delaware County’s condos and high-end homes have been hit hardest in the downturn, Kaitsa said. Generally, homes that sold in the past for more than $750,000 have seen declines of 20 to 30percent.  

Similarly in Franklin County, “high-end homes over the past couple years were not selling,” Frissora said. He said those sales have been hurt because “jumbo loans” are less available today.  

Even if you were lucky enough that your property value has remained the same, your tax bill could be higher if other properties in your taxing district have fallen in value. The reappraisal process will shift the burden.  

Cities, school districts and other recipients of property taxes generally are guaranteed the same total, regardless of rising or falling tax values. Ohio’s “reduction factor” was designed to keep tax bills in check as property values rise, but now it will do the opposite: raise millage as total appraisals fall.  

bbush@dispatch.com