Ohio § 5715.01

§ 5715.01.

(A) The tax commissioner shall direct and supervise the assessment for taxation of all

real property.  The commissioner shall adopt, prescribe, and promulgate rules for the determination

of true value and taxable value of real property by uniform rule for such values and

for the determination of the current agricultural use value of land devoted exclusively

to agricultural use. (1) The uniform rules shall prescribe methods of determining the true value and taxable

value of real property.  The rules shall provide that in determining the true value of lands or improvements

thereon for tax purposes, all facts and circumstances relating to the value of the

property, its availability for the purposes for which it is constructed or being used,

its obsolete character, if any, the income capacity of the property, if any, and any

other factor that tends to prove its true value shall be used.  In determining the true value of minerals or rights to minerals for the purpose

of real property taxation, the tax commissioner shall not include in the value of

the minerals or rights to minerals the value of any tangible personal property used

in the recovery of those minerals. (2) The uniform rules shall prescribe the method for determining the current agricultural

use value of land devoted exclusively to agricultural use, which method shall reflect

standard and modern appraisal techniques that take into consideration the productivity

of the soil under normal management practices, typical cropping and land use patterns,

the average price patterns of the crops and products produced and the typical production

costs to determine the net income potential to be capitalized, and other pertinent

factors. In determining the agricultural land capitalization rate to be applied to the net

income potential from agricultural use, the commissioner shall use standard and modern

appraisal techniques.  In calculating the capitalization rate for any year, the commissioner shall comply

with both of the following requirements: (a) The commissioner shall use an equity yield rate equal to the greater of (i) the average

of the total rates of return on farm equity for the twenty-five most recent years

for which those rates have been calculated and published by the United States department

of agriculture economic research service or another published source or (ii) the loan

interest rate the commissioner uses for that year to calculate the capitalization

rate; (b) The commissioner shall assume that the holding period for agricultural land is twenty-five

years for the purpose of computing buildup of equity or appreciation with respect

to that land. The commissioner shall add to the overall capitalization rate a tax additur.  The sum of the overall capitalization rate and the tax additur shall represent as

nearly as possible the rate of return a prudent investor would expect from an average

or typical farm in this state considering only agricultural factors. The commissioner shall annually determine and announce the overall capitalization

rate, tax additur, agricultural land capitalization rate, and the individual components

used in computing such amounts in a determination, finding, computation, or order

of the commissioner published simultaneously with the commissioner's annual publication

of the per-acre agricultural use values for each soil type. (3) Notwithstanding any other provision of this chapter and Chapter 5713. of the Revised

Code, the current agricultural use value of land devoted exclusively to agricultural

use shall equal the following amounts for the years specified: (a) In counties that undergo a reappraisal or triennial update in 2017, the current agricultural

use value of the land for each of the 2017, 2018, and 2019 tax years shall equal the

sum of the following amounts: (i) The current agricultural use value of the land for that tax year, as determined under

this section and section 5713.31 of the Revised Code , and rules adopted pursuant those sections, without regard to the adjustment under

division (A)(3)(a)(ii) of this section; (ii) One-half of the amount, if any, by which the value of the land for the 2016 tax year,

as determined under this section, section 5713.31 of the Revised Code , and the rules adopted pursuant those sections and issued by the tax commissioner

for counties undergoing a reappraisal or triennial update in the 2016 tax year, exceeds

the value determined under division (A)(3)(a)(i) of this section. (b) In counties that undergo a reappraisal or triennial update in 2018, the current agricultural

use value of the land for each of the 2018, 2019, and 2020 tax years shall equal the

sum of the following amounts: (i) The current agricultural use value of the land for that tax year, as determined under

this section and section 5713.31 of the Revised Code , and rules adopted pursuant those sections, without regard to the adjustment under

division (A)(3)(b)(ii) of this section; (ii) One-half of the amount, if any, by which the value of the land for the 2017 tax year,

as determined under this section, section 5713.31 of the Revised Code , and the rules adopted pursuant those sections and issued by the tax commissioner

for counties undergoing a reappraisal or triennial update in the 2017 tax year, exceeds

the value determined under division (A)(3)(b)(i) of this section. (c) In counties that undergo a reappraisal or triennial update in 2019, the current agricultural

use value of the land for each of the 2019, 2020, and 2021 tax years shall equal the

sum of the following amounts: (i) The current agricultural use value of the land for that tax year, as determined under

this section and section 5713.31 of the Revised Code , and rules adopted pursuant those sections, without regard to the adjustment under

division (A)(3)(c)(ii) of this section; (ii) One-half of the amount, if any, by which the value of the land for the 2018 tax year,

as determined under this section, section 5713.31 of the Revised Code , and the rules adopted pursuant those sections and issued by the tax commissioner

for counties undergoing a reappraisal or triennial update in the 2018 tax year, exceeds

the value determined under division (A)(3)(c)(i) of this section. (4) The uniform rules shall prescribe the method for determining the value of federally

subsidized residential rental property through the use of a formula that accounts

for the following factors: (a) Up to three years of operating income of the property, which includes gross potential

rent, and any income derived from other sources as reported by the property owner

to the county auditor under section 5713.031 of the Revised Code .  Operating income shall include an allowance for vacancy losses, which shall be presumed

to be four per cent of gross potential rent, and unpaid rent losses, which shall be

presumed to be three per cent of gross potential rent.  These presumptive amounts may be exceeded with evidence demonstrating the actual

income of the property. (b) Operating expenses of the property, which shall be presumed to be forty-eight per

cent of operating income plus utility expenses as reported by the property owner to

the county auditor under section 5713.031 of the Revised Code .  Operating expenses shall also include replacement reserve fund or account contributions

which shall be presumed to be five per cent of gross potential rent.  These presumptive amounts may be exceeded with evidence demonstrating the actual

expenses of the property.  Real property taxes, depreciation, and amortization expenses and replacement of

short-term capitalized assets shall be excluded from operating expenses. (c) A market-appropriate, uniform capitalization rate plus a tax additur accounting for

the real property tax rate of the property's location.  For federally subsidized residential rental property described in division (A)(1) of section 5713.031 of the Revised Code , one percentage point shall be subtracted from the uniform capitalization rate. The uniform rules shall also prescribe a minimum total value for federally subsidized

residential rental property of five thousand dollars multiplied by the number of dwelling

units comprising the property or one hundred fifty per cent of the property's unimproved

land value, whichever is greater.  The formula and other rules adopted by the commissioner pursuant to this division

shall comply with Ohio Constitution, Article XII, Section 2 . As used in division (A)(4) of this section, “federally subsidized residential rental

property” has the same meaning as in section 5713.031 of the Revised Code and “dwelling unit” has the same meaning as in section 5321.01 of the Revised Code . (B) The taxable value shall be that per cent of true value in money, or current agricultural

use value in the case of land valued in accordance with section 5713.31 of the Revised Code , the commissioner by rule establishes, but it shall not exceed thirty-five per cent.  The uniform rules shall also prescribe methods of making the appraisals set forth

in section 5713.03 of the Revised Code .  The taxable value of each tract, lot, or parcel of real property and improvements

thereon, determined in accordance with the uniform rules and methods prescribed thereby,

shall be the taxable value of the tract, lot, or parcel for all purposes of sections 5713.01 to 5713.26 , 5715.01 to 5715.51 , and 5717.01 to 5717.06 of the Revised Code .  County auditors shall, under the direction and supervision of the commissioner,

be the chief assessing officers of their respective counties, and shall list and value

the real property within their respective counties for taxation in accordance with

this section and sections 5713.03 and 5713.31 of the Revised Code and with such rules of the commissioner.  There shall also be a board in each county, known as the county board of revision,

which shall hear complaints and revise assessments of real property for taxation. (C) The commissioner shall neither adopt nor enforce any rule that requires true value

for any tax year to be any value other than the true value in money on the tax lien

date of such tax year or that requires taxable value to be obtained in any way other

than by reducing the true value, or in the case of land valued in accordance with section 5713.31 of the Revised Code , its current agricultural use value, by a specified, uniform percentage.