Changes coming to Ohio’s real property tax exemption laws

Beginning in 2022, Ohio will require owners of exempt real property to notify the county auditor if the property “ceases to qualify for exemption.”

House Bill 110 – the most recent budget bill – included a provision that will require real property owners who own property that is exempt from property taxes to notify the county auditor if their exempt property no longer qualifies for exemption. Hospitals, churches and other use-based exempt properties will be directly affected by the new law.

This requirement, which goes into effect for tax year 2022 and can be found at Ohio Revised Code Section 5713.083, will impose a monetary penalty on any property owner who fails to notify the auditor that the property has ceased to qualify for exemption by December 31 of the year in which the property no longer qualifies for exemption. The penalty will be “equal to the total amount by which taxes were reduced for any of the five preceding tax years” that the auditor determines the property was not entitled to exemption. This penalty will only apply to the years in which title to the property was held by the current property owner.

How Ohio’s 88 county auditors plan to monitor and enforce this new provision remains uncertain, and because it is the Ohio Tax Commissioner who usually determines that property qualifies for exemption in the first place, the test that owners should apply to try and comply with this change is also unclear.

The Tax Commissioner will promulgate a form for owners to use to attempt to comply with this law. Property owners should plan to prepare an inventory of their exempt properties before the notification requirement becomes effective in 2022.