Challenging Property Taxes in Cuyahoga County

[Luke Terry]

I'm wondering if anyone's had success lowering their property taxes and if so, what were the steps they took to be successful?

Property taxes can be a huge impact on your cash flow based on the city you buy in.  From what I understand if you buy a distressed property at a good deal and the county has the home valued higher than what you purchased then you have got a good case for the county to lower it to your purchase price.

I'm going through the process for the first time now.  Here's what I did:

1. Used county records to see what the house is valued at https://myplace.cuyahogacounty.us/

2.  Since I was able to purchase the home for $25K less than what was valued, I submitted a form through the county

https://treasurer.cuyahogacounty.us/en-US/contesting-property-value.aspx

Now I'm just waiting.  

Let me know what experiences/ tips you may have with this.  Thanks for your help

Thanks

[Bob Collett]

@Luke Terry

You are correct. Property tax in Cuyahoga County is based upon actual value. 

When you purchase a property in an arms length transaction, in the open market; that transaction is a significant data point in determining its value. The county will also look at other recent sales to determine your market value.

If you could flip your house today at a higher price without any repairs, then the the fair market value for tax purposes is the price you could sell it for today. 

Keep in mind that buying from a foreclosure sale or an off market deal where the seller (not the property) was distressed is not a considered an arms length transaction.

When you make improvements to the property, known as rehabilitation or renovation; you necessarily increase the value. If the panel is doing their job, they will ask if you made any repairs or improvements.

If you asked for a 20% or greater reduction in your complaint, this will likely result in a hearing. At the hearing, the panel will have their laptop with the MLS open, and will verify values of neighboring properties. So be prepared with your own printed reports.

When you file your complaint, you should do a thorough analysis of comparable neighborhood properties. You need to prove that your property has a lower value. 

What is the average price per square foot for the 10 most recent sales in the area? That is one way to point to your base value. Then you can deduct for deficiencies on your property.

If you have a real estate agent have them do a BPO. If you are asking for more than 20% reduction, you might want to hire a licensed appraiser.

If you had an independent third party I nspection, you can bring the inspection report to the hearing. This is a great way to rstabish the property’s deficiencies. Bring photos showing the condition of the property. 

A rental log showing below market rents... or a vacant property is also an indication of lower values. They will usually ask if the property is rented. High rents are are indication of property value. Remember, income is one of the three approaches to appraise a property.

I have filed many property tax complaints for clients and for my own properties and prevailed in most of them. The folks who make the decision are fair, but they are not stupid. Prove the new value and you will win the complaint... what would the property sell for today in an arms length transaction in a fully informed market (MLS).

Sometimes you can get lucky just by showing that you paid less that the county appraised value, and stating that you have not made any improvements. But it is better to prove your case by comparing your property with other sold properties.

Remember, once you improve the value (new roof, windows, siding, electrical, kitchen, bathrooms, etc) then the tax valuation should properly increase.

The county adjusts values every three years.

Good luck

Bob

[Mike Pizzino]

Great info Bob!  Thanks for sharing.

[Tra'Mell Taylor]

@Bob Collett that was indeed great info! thanks!

[Surya Kumar]

Sorry for the bump. @Bob Collett Do you know how much time they take? I contested taxes for one of my property (27% reduction) at the start of last year (Jan 2018) and I still haven't heard back from them. They haven't responded nor called me for a hearing. Does it take this time usually? 

[Bob Collett]

Does not us usually take so long. Call and ask for status.

bob

[Luke Terry]

@Surya Kumar  I submitted in March and had by hearings in August.  They said theoretically they could do hearings a year out depending on the backlog but I would think you'd at least get scheduled.  I'd recommend contacting them.

[Tristan Colborg]

This is great to know. I just got my first tax bill on a property I bought in October and the taxable value is pretty much what I paid for it. Do you think I could still use the home inspection as a tool to lower the property taxes? I'm in the process of rehabbing it now and ARV should be around $140-$150. Purchase price was $102k and tax value is at $106k. When I ran my numbers I ran it at a higher tax rate. Just wondering if I should still try to contest the current tax value.

Also when I go to refinance how will that impact the taxable value?

[Phillip Brusk]

@Tristan Colborg From my understanding, refinancing should not affect your taxable value since the property is not being transferred. There won't be a new deed recorded. There will only be a new deed recorded if you move the property into an LLC, add someone, or remove someone from the deed. However, this would be a quit claim deed with $0 as the consideration.

[Luke Terry]

@Tristan Colborg I can only speak for Cleveland, but I wouldn't expect to be successful challenging their tax assessment if it matches the price I purchased the home for.  In every case I'm challenging the assessment because I was able to buy the property at a substantially cheaper price.

[Bob Prisco]

@Luke Terry much success, 10s of thousands ( for clients and personal props ) really very simple to do, a few forms, 

Good Luck 

[Carrie Taich]

Hi, its 2024 and in the 2023 property tax bill just received, Cuyahoga County reassessed the 21 unit building we bought in 2021.  They retroactively applied increased property tax values to tax years 2021 and 2022 and included these fees for past years as "omitted taxes" on our bill.  Does anyone know if this is legal?

[Andrew Weiner]

Quote from @Carrie Taich:

Hi, its 2024 and in the 2023 property tax bill just received, Cuyahoga County reassessed the 21 unit building we bought in 2021.  They retroactively applied increased property tax values to tax years 2021 and 2022 and included these fees for past years as "omitted taxes" on our bill.  Does anyone know if this is legal?

I don't know if its legal but they do it regularly.  You can file to contest valuations but depending on how much the difference is it might not be worth it.  You also risk having the property appraised higher than what it currently is even if you bring the complaint, and yes this did happen to a client of mine.
There are local attorneys that fight these valuations and their fee is based on how much they get the value reduced, I don't have any direct recommendations but I think a quick google search should give you a few leads.  Also depending on which school district it is in then you may have the school show up or send a representative to fight for a higher value.  

[Erin Dorsey Robinson]

Quote from @Carrie Taich:

Hi, its 2024 and in the 2023 property tax bill just received, Cuyahoga County reassessed the 21 unit building we bought in 2021.  They retroactively applied increased property tax values to tax years 2021 and 2022 and included these fees for past years as "omitted taxes" on our bill.  Does anyone know if this is legal?

 Hi Carrie- I'm with Andrew on legality. But you might also consult an appraisal company. They regularly go in and dispute valuations. This is prime season for them. Please let me know if you need a contact.