Political pressure to curb tax growth tends to increase when real estate values rise.
Toward the end of the last housing boom, in 2006 and 2007, lawmakers across the country introduced bills to expand relief, according to research by the Lincoln Institute of Land Policy, a Cambridge-based think tank in the Massachusetts.
The subject lost its relevance during the Great Recession, as prices fell. But the housing market’s recent record run has once again had policymakers on both sides of the aisle talking about ways to protect landlords like Bambeck from eviction.
In Ohio, such an effort would require General Assembly action. Several bills introduced last year seek to increase the state’s homestead exemption, a longstanding tax break for low-income seniors and people with disabilities.
Beneficiaries do not pay taxes on the first $25,000 of the market value of their home. Today, that translates to average annual savings of just over $500, according to the Ohio Department of Taxation.
The $25,000 figure has not changed for years. And for most of its existence, the program carried an income limit. The current limit is an adjusted gross income of $34,200.
Some legislators seek to link the amount of the exemption to inflation, to reflect rising costs. Others want to increase both the size of the tax relief and the income threshold. These proposals call on the state to reimburse school districts and other local taxing authorities for lost revenue – similar to how the Homestead program operates today.
“I think we could do a lot more with our homestead program in Ohio,” said Matt Nolan, Warren County Auditor and head of a tax and valuation-focused committee for County Auditors’ Association of Ohio. “I think it’s one of the worst farm programs in the country.”
From 2007 to 2013, the state removed the income limit, opening the tax relief to all homeowners over age 65. Authorities imposed a new cap in 2014 but allowed anyone who had applied for the exemption to continue to receive it, regardless of income.
Turnout has since declined, despite the state’s rapidly aging population.
A more robust farm program could serve as both a retention and attraction tool, said Doug Beach, CEO of the Western Reserve Area Agency on Aging, which is based in Cleveland and serves five northeastern counties in Ohio. “As longtime contributors to society, older Ohios deserve to age gracefully in their own homes and in the communities they helped build and sustain,” Beach wrote in testimony submitted to the House. general last year.
The exemption is not enough to protect homeowners in Cleveland neighborhoods where high poverty and new construction coexist. In Ohio City, former U.S. Representative Mary Rose Oakar helped some of her neighbors challenge their assessments for 2018, when Cuyahoga County conducted its last full reassessment, and 2021, when authorities provided an update.
“It’s really crucifying for some people,” said Oakar, who is 82 and still meets with former constituents and friends in an office at his side-by-side duplex.
A former neighbor saw her property taxes jump by $1,600 for 2018, a 56% increase. A retired pantry manager, the woman sold her house and moved in with her daughter – after finding herself on the other side of a food distribution counter, in need of free produce.
Many older homeowners are unable or unwilling to apply for a writedown through the Cuyahoga County Board of Review, which reviews individual cases. And their chances of successfully driving down their values, which combine with levies and other factors to determine tax bills, are low in places where new and remodeled homes drive the market higher.
The appeals process can be intimidating or downright demeaning, said Donald Durrah, an 80-year-old appraiser and real estate broker who lives in Glenville, on the East Side of Cleveland. He’s worked with landlords to fight their assessments, but he’s also seen elderly residents drop out and move out.
They are faced with a choice between two painful options: sale and tax seizure.
“You can’t run over old people. They don’t move that fast,” said Durrah, who welcomes the growth of nearby University Circle spinoffs but feels there must be buffers for residents of long time.
“Everyone here is north of 70,” he said of his street, Wade Park Avenue, which is lined with century-old homes. “Another 10 years will be over anyway.”