Homestead Exemption: Do you qualify to save on Property Taxes?

Recently, Ohio changed the Homestead Exemption Program.  The Homestead Exemption provides a qualified homeowner savings on real property taxes.  To qualify, a homeowner must meet the following criteria:  (1) Own and occupy a home in Ohio as their principal place of residence as of January 1, 2013 (for current year eligibility); and (2) the titled owner of the property is, or will become 65 years of age by December 31, 2013, or the homeowner has been certified as totally and permanently disabled as of January 1, 2013, or be the surviving spouse of a qualified homeowner, who was at least 59 years of age on the date of their spouse’s death.

For individuals who qualify, the Homestead Exemption allows such homeowners to reduce their real property tax obligations by exempting a portion of the market value of their residence from taxation.   The exemption, which appears as a credit on property tax bills, allows the qualifying homeowner to exempt $25,000 of the market value of their residence from all local property taxes.  For illustrative purposes, a qualified homeowner who has made application for the Homestead Exemption for their house having a market value of $200,000, would be taxed as if the market value of the home was $175,000.

Beginning with tax year 2014, new participants in the Homestead Exemption Program will be subject to a means test for eligibility, in addition to the above referenced factors.  The means test is basically an income limitation to the program.  Under this test, if a homeowner’s income exceeds $30,000, then that homeowner will not qualify for the Homestead Exemption.  The income threshold is determined by Ohio Adjusted Gross Income, as such amount is defined on the Ohio Income Tax Return.  It should be noted, however, that such amount does not include taxable Social Security benefits from the Federal Tax Return.

For current eligible homeowners, who have not yet availed themselves of the Homestead Exemption Program, it is important to note that homeowners who received a Homestead Exemption Credit for tax year 2013, or prior tax years, will not be subject to the income requirement going forward.  In essence, those Ohioans who are already in the Homestead Exemption Program will continue to receive the credit on their real estate taxes without being subject to the above described means test.  Moreover, homeowners in the Program do not need to reapply to the Program, unless they change their address of primary residency.

Historically, the deadline to apply for the Homestead Exemption Program was the first Monday of June of a given year.  Under the new program, applications should continue to be filed between the first Monday in January through the first Monday in June with the County Auditor.    However, with the new law going into effect, eligible homeowners in calendar year 2013 can file the appropriate application during the aforementioned dates in 2014, but must mark the “late application” box on the submission form to be considered for the exemption and not be subject to the means test.

Ohioans who are currently eligible, or who will become eligible, on or before December 31, 2013, and who have not made applications to their County Auditor for the Homestead Exemption, are encouraged to do so prior to the aforementioned deadline.  Any application that is received after such deadline even if you have met the eligibility requirements, will be subject to the $30,000 maximum income limitation under the means test.

Further information regarding the Homestead Exemption Program for Montgomery County, Ohio can be found at www.mcohio.org/government/auditor/homestead/index.html.   From this link, an application can be downloaded, in addition to a variety of other FAQs and more detailed information regarding the Homestead Exemption Program.  Additionally, a directory of County Auditors is also available on the Montgomery County Auditor’s Homestead Exemption web page for reference.  The Montgomery County Auditor has established a Homestead Hotline at 937-225-4341 and other County Auditors may have similar services/resources.

Should you have any questions or concerns regarding the Homestead Exemption Program, please do not hesitate to contact David Montgomery at 223-1130.

AUTHOR: David Montgomery
dmontgomery@pselaw.com