Property Taxes: How They Work and Why You Should Care

It’s everyone’s (least) favorite time of year again…PROPERTY TAX TIME! When all of us homeowners happily hand Uncle Sam a big chunk of money in exchange for the distinguished privilege of owning a small patch of grass with four walls and a roof on it…or not. Obviously that’s a bit tongue-in-cheek, but property taxes are something that seems to get people fired up, especially when they’re just a bit too high for their liking.

So for those of you who wonder just exactly how those taxes are calculated, let’s go straight to the source and get our answer directly from the Montgomery county website:

“In the State of Ohio, real estate taxes are based upon the appraised value of property. Counties, cities, towns, villages, school districts, and special districts each raise money through real estate taxes. Governments have the ability to levy taxes upon land located within their jurisdiction. The money collected from taxes funds schools, pays for police and fire protection, maintains roads, and supports community services such as libraries and parks.”

See, totally explains things and makes you feel a whole lot better about that seemingly arbitrary number that you’re supposed to pay, right? Oh wait, no it doesn’t. Not even a little bit.

Instead, let’s break things down into the two components that play a part in determining exactly what your bill is going to be. Your municipal millage rate and your county appraised value.

Millage Rate
The other piece of the puzzle is your millage rate, which accounts for any municipal levies applied to your property based on location, and is multiplied by a portion of your county appraised value. This is what accounts for one area being more or less expensive than another, even though the appraised values may be exactly the same. Unfortunately, this you’re not going to change outside of the ballot box, so it’s worth knowing, but isn’t going to be something that you can contest.

County Appraised Value
This is what the county you live in has determined that your property is worth, based on a number of different criteria (size, age, neighborhood, etc) and any broad market changes that have occurred in your area since the last revaluation. Typically, a full revaluation is done every six years (get ready for 2020 Montgomery county residents!), with an update done in the third year of that six year cycle.

Realize though that this number typically lags behind market value a bit for a few reasons:

  1. The numbers aren’t updated as frequently and aren’t as responsive to market forces as market value would be, which reflects demand/inventory more fluidly.
  2. The county doesn’t always know when someone, for example, finishes their basement. Rightly or wrongly this happens A LOT, and is certainly something that adds value, but short of being told about it or a permit being pulled, the county may not know about an improvement and therefore have no reason to change their value.
  3. Numbers are just flat out wrong. Many times info like square footage just isn’t reflected correctly by the county, which in turn leads to a misrepresentative valuation. Generally, if something is misrepresented in favor of the county then the homeowner is going to make sure that discrepancy is corrected, but when the flip side is true and the error is in favor of the homeowner, things don’t always get reported.


With all of those variables muddying the water, if you’re looking for the leeway to challenge your property taxes then the appraised value is what you’re going to focus on. So, if you’d like some advice on whether or not a valuation challenge is a worth your time or not let us know! We’d be happy to provide you with some data ammunition for your appeal.