As reappraisals raise property values, fewer Ohio seniors eligible for homestead exemption

The number of Ohio households claiming the "homestead exemption" — a special tax break for low-income seniors age 65 and up and permanently and totally disabled people that exempts the first $25,000 of their home's appraised value from property taxes — has fallen by more than 20% statewide since 2013.

That's when the Republican-controlled General Assembly and then-Gov. John Kasich reinstituted an income limit for seniors to qualify for the break that is adjusted annually based on the rate of inflation. The maximum income for 2023 is $36,100 annually for the owner and the owner's spouse.

As a result, the number of people qualifying for the exemption has fallen from more than 900,000 in 2013 to under 721,000 as of 2021, the last year for which data from the Ohio Department of Taxation is available.

"Our sense is that the income requirement limitations are likely the cause of the continued decline in exemptions granted," said Gary Gudmundson, spokesman with the state Taxation Department.

Among the seven counties in central Ohio, that income requirement to qualify for the homestead tax break has hit rural counties harder than urban Franklin County, state data indicates.

Between 2013 and 2021, Franklin County has seen its exemptions drop 13.9%, from 56,292 exemptions to 48,452. It was followed by: Licking County (down 17.4%, from 13,522 to 11,171); Delaware County (down 19.9%, from 10,445 to 8,367); Fairfield County (down 21.4%, from 10,628 to 8,355); Pickaway County (down 21.5%, from 3,933 to 3,085); Union County (down 23.1%, from 3,149 to 2,421) and Madison County (down 23.3%, from 3,063 to 2,349), according to the state data.

"I was surprised that we were one of the highest drops of all of them," said Madison County Auditor Jennifer Hunter, a Republican who has held the post in the largely rural county west of Franklin County since 2011.

"There are a lot of people who are retired that it's hard for them to get under that" income limit, particularly if they have any supplemental pension income, she said.

With Madison County currently in the midst of a property reappraisal that is expected to raise values by 32% on average, Hunter said she thinks the income limit "probably should be looked at as far as who could qualify, and expand the numbers a bit."

And she's not alone. As property reappraisals have skyrocketed over the last several years, some leaders — both local and statewide — now say it's time to take a major look at the exemption amount, the income limit or maybe both.

How the homestead exemption began, how it's going

The homestead exemption program was originally instituted in Ohio when voters approved a constitutional amendment in 1970 that was targeted only for low-income seniors citizens. But in 2007, then-Gov. Ted Strickland, the last Democrat to serve as Ohio governor when he lost reelection and left office in 2011, led an effort to do away with the then-$26,200 maximum income requirement to qualify.

That opened up a floodgate of new senior applicants eager to take a flat $25,000 off the appraised values of their homes, thereby lowing their property tax bills regardless of income. Within the first year of the change, the number of exemptions statewide more than tripled to more than 776,000 exemptions in 2007 from just under 217,000 the year before, according to the Ohio Department of Taxation.

And that number kept heading up as the state's population aged.

The number of exemptions swelled to more than 902,000 in 2013, as some residents rushed to apply before the reinstituted income requirements became law in 2014 so that they would be grandfathered in regardless of their future income. The exemption was worth about $498 off the average tax bill in 2013, or about $664 today after adjusting for inflation, according to the Department of Taxation.

Seniors applying since 2014 have had to worry about making too much money, thus beginning a steady annual decline in the number of exemptions. The decline is also the result of people grandfathered in dying over the years, and their homes transferring to people who don't qualify, state officials say.

Since 2014 veterans totally and permanently disabled from a service-related experience got a boost from $25,000 to $50,000 off their home values without any age or income requirement, according to the state taxation department.

In 2021 a homestead exemption of $50,000 with no means test was also extended to surviving spouses of public safety personnel killed in the line of duty. Yet that year — the last for which homestead exemption records are available from the state — the number of exemptions had fallen to 720,521, worth an average of $478 off tax bills, or about $561 today.

Support for change growing

County auditors of both parties support changes that could increase the number of qualifying seniors.

Franklin County Auditor Michael Stinziano testified before the state legislature last spring that as the population of older citizens grows alongside their increasing housing-cost burdens, a more generous homestead exemption could help provide needed relief and keep seniors from losing their homes.

"The (Harvard University) Joint Center for Housing Studies in 2017 found that the housing burden for older residents had reached an all-time high," Stinziano told lawmakers.

Stinziano noted that in the Columbus metro area, 24% of homeowners ages 65 and above are "housing cost burdened," despite a median income of $50,000 per year. Almost half continued to pay off mortgages into retirement, he said.

Meanwhile, the number of seniors eligible for exemptions under the current income limit has continued to plunge in Franklin County, reaching a current low of 44,505 "even as our age-eligible population grows," Stinziano said. That would put the county's total drop in exemptions since the income requirement's reinstatement at almost 21%.

One problem with making changes is that the $25,000 exemption from total appraised value was set by statute in 2007, while housing values have soared since then, making that amount a smaller fraction of previous value, said David Thomas, the Republican auditor of Ashtabula County located in the northeast corner of the state, bordering Pennsylvania and Lake Erie. Parcels in his county are set to rise by an average of 32% during the next reappraisal.

Some state lawmakers also are averse to increasing the exemption amount and the income eligibility because the state must reimburse local governments for the revenue lost through the credits, Thomas said.

A recent measure in the state budget bill will, beginning next year, allow the $25,000 credit off a home's taxable value to increase annually with inflation.

"Big deal," state Rep. Daniel Troy, a Democrat from a district east of Cleveland, said of the tweak.

Troy had proposed a bill to raise the exemption to the inflation-adjusted value of what $25,000 was worth when that amount was set in 2007, or about $40,000. The income requirement would also correspondingly adjust upward to $45,000.

But that bill stalled, Troy said, with opponents in the legislature saying, "Well, we just don't have the money."

Troy said the measure would have cost the state about $220 million per year, or a fraction of the billions of dollars that the latest round of tax cuts given to businesses and high-income residents have reduced the state's revenue collections.

"Don't tell me we don't have the money," Troy said of the state's reserve funds, "because we have the money."

How to apply for a homestead exemption

To apply, fill out the Ohio Department of Taxation application form (DTE 105A, Homestead Exemption Application Form for Senior Citizens, Disabled Persons, and Surviving Spouses) on the department's website or your county auditor's website, or you can print it out, fill it out and mail it in. You must attach or provide photocopy proof of age with a driver's license, State of Ohio ID card, birth certificate or passport. Disabled applicants must provide documentation of their permanent disability as well. Sign the form electronically or in writing and file it with the county auditor where the property is located. Here is a directory of county auditors with addresses for mailing handwritten and signed forms, and telephone numbers if you have questions.

Applications for real property must be filed on or before Dec. 31 of the year for which homestead exemption is sought. Applications for manufactured or mobile homes must be filed anytime on or before the first Monday in June of the year preceding the year for which a homestead exemption is sought, according to the Ohio Department of Taxation.

For a list of frequently asked questions visit this link at the taxation department.

wbush@dispatch.com

@ReporterBush

This article originally appeared on The Columbus Dispatch: Homestead exemption needs expanded say county auditors of both parties