Fewer Ohioans will qualify for a major property tax break starting with taxes payable in 2015, because of a recent change in state law.
Since 2007, the Homestead Exemption has allowed all Ohio homeowners who are over age 65 or totally disabled to exempt $25,000 of their appraised home value from taxes, if they live in that home.
Because of varying tax rates, in 2013, the exemption saved qualifying homeowners up to nearly $800 in some communities, according to the Montgomery County auditor’s office.
But starting next year, Ohio will reinstate an income limit for the credit, as was the case from 1971 through 2006. People with more than $30,500 in Ohio adjusted gross income will not qualify for the exemption, unless they qualify via a disability, or are grandfathered in because they already receive the credit.
“There is a window of opportunity until June 2 for anyone who qualified for the program in 2013 but failed to enroll for whatever reason, to sign up and qualify under the old rules,” said Montgomery County Auditor Karl Keith. “This may be their last chance to qualify for the program, so we want to make sure we get the word out to those folks.”
The change, which was a late addition to the state budget bill last summer, is part of a larger revamp of Ohio’s tax structure, including cuts to the state income tax and increases to Ohio sales tax.
The homestead exemption is paid for by the state, with the government paying the portion of property tax that the homeowner avoids.
Gary Gudmundson, spokesman for the Ohio Department of Taxation, said the state’s bill for the homestead exemption went from $70 million in 2006 (when there was an income limit) to $410 million in 2012, and that figure was projected to keep increasing. But Gudmundson said the change in law is projected to save Ohio $9 million in 2015, and $27 million in 2016, with those savings likely to increase each year.
Gudmundson also pointed out that people should look carefully at the $30,500 income limit, because Social Security payments and certain pensions and interest income are excluded from Ohio adjusted gross income. As a result, Gudmundson said it’s possible a household could have $50,000 in total income and still be under the $30,500 OAGI cap to qualify for the homestead break.
In 2013, more than 100,000 people received the homestead exemption in Butler, Montgomery, Greene, Warren and Clark counties.
Three classes of people will qualify this year to receive the exemption in 2015, according to county auditors. First, all existing recipients are grandfathered in for life. Second, those who met the softer eligibility requirements in 2013 but did not apply, can do so until June 2, and will be grandfathered in for life. Third are those who turn 65 or become totally disabled in 2014. That group will qualify for the exemption if their income is under the limit.
Clark County Auditor John Federer said about 100 people came into the office last week to apply for the homestead exemption. He said the auditor’s office has used releases, public presentations and social media to spread information about the program.
Federer and Keith both stressed that the exemption is portable for those who qualify.
“If you are on the homestead (exemption) and you sell your home and move to another home in Ohio, that benefit can follow,” Federer said.
Applications for the homestead exemption are available through each county’s auditor’s office.