Several years ago I began tracking the multiple real estate tax rates by school districts for Columbus suburbs. I did this so buyer clients could get a feel for differences that the tax bill portion of their mortgage payment would make to the affordability of the homes we would be viewing.
When buyers have a lender pre-qualify them, the lender will tell them the maximum home price the buyer can select. They’ll also give them a maximum monthly payment. Because the tax rates among school districts can vary quite a bit, a buyer who has been approved to buy an average priced home of $200,000 may be able to be approved for that home in one district but not another. The reason is that the monthly tax portion of the mortgage payment may put them beyond the ratio set by the lender.
The other issue that may come into play, is that a school district with “lower” tax rates, may have higher priced homes. The Olentangy school district is an example of this. This district’s rates are lower than some other established suburbs, but the average home price in the district is much higher. If a buyer is approved for only $200,000, they will be hard-pressed to find a home at that price in the Olentangy district, yet, may find many such homes in that price range in Worthington, even though Worthington’s property tax rates are much higher.
Here is the chart that I’ve prepared to visually show the differences to school district property tax rates by several suburban school districts. The bars within a district represent the various taxing entities within the school district. (click on the graph to enlarge)
Of course, it goes without saying that buyers should budget for their tax rates to increase over the years they live in the home. This is especially true for the newly developing areas, like the Olentangy school district, where the growth in housing has and is creating a need to build new schools.
Copyright © 2008. Reproduction of any portion of this blog post or the images is prohibited by the Digital Millennium Copyright Act. If this post is being viewed on any site other than www.ReesesPiecesOfRealEstate.com then the material has been stolen without permission. Violators will be reported.
Should I vote ‘yes’ or ‘no? Taxes ‘up’ or ‘down’?
Next week we have an election for local issues and/or levies. We’re all too familiar with issues being written such that a ‘NO’ vote is really a ‘YES’ vote. It can be so confusing.
Today we had a meeting with the Franklin County Auditor’s staff giving us a presentation on the new features of their web site. During one of the slides, he showed us the tax estimator page which allows residents to see the dollar change the levy or issue would have on future taxes. As we were reviewing the information on the web page, we noticed an inconsistency to what the language of the proposed levy said versus the impact on the property tax.
The Proposed Levy Says It’s A Decrease
The proposed levy is promoted as a “replacement levy” that will be a “decrease” in taxes. The old levy that expires was a 3.15 mill levy. The new replacement levy – if voters approve – will be a 3.10 mill levy. OK, that’s a decrease.
HOWEVER, levies can only collect a maximum amount of money. If property values or the number of households/businesses increases, then the millage per parcel may actually be lower than millage that was voted in. That’s what happened to this original levy. Even though voters originally voted for the 3.15 mill levy, it’s actually being collected at a rate of only 2.010197.
The Proposed Levy Will Actually Be A Increase
If voters approve the 3.10 Replacement Levy, they may actually see an INCREASE to their taxes since instead of collecting at the 2.010197 rate, taxes may be collected at 3.10 mill rate. So that will be an increase, not a decrease.
Using a Hilliard home as an example
Using a Hilliard home as an example, the Auditor shows an assessed value of $149,800. The annual tax payment for this home is $3497. Using the Auditor’s tax estimator, if the replacement levy passes, instead of paying $7.69 for the current levy, the new replacement levy would collect $11.85.
So that’s how a Replacement/Decrease levy can result in an increase to the tax you may actually pay.
While I’ve used a particular Franklin County levy as an example, the discussion can really apply to any county and any levy. The key point is that rather than just accepting what the levy ballot language is, do a little checking to see how it differs from what is currently being collected. You can be sure that the proponents of this replacement levy aren’t going to mention that households may pay more. They want to put a positive spin on the levy so voters will pass it. Plus, they are correct in that it is a decrease … you just may not see that decrease when your property tax bill arrives in the mail.
BE AN INFORMED VOTER … THEN VOTE!
Copyright © 2009. Elaine Reese, Real Living HER. Reproduction of any portion of this blog post or the images is prohibited by the Digital Millennium Copyright Act. If this post is being viewed on any site other than www.ReesesPiecesOfRealEstate.com then the material has been stolen without permission. Violators will be reported.
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Posted in Central Ohio, Commentary, Franklin County
Tagged central ohio real estate market news, property taxes, real estate property tax rates