Ohio Has Two Homestead Exemptions. This Is the Tax One

First, which homestead exemption are we talking about?

Ohio uses the word "homestead" for two unrelated protections, and search engines cheerfully mix them. We should declare an interest here: we published an article about the other one earlier this month, so we are part of the problem. Here is the distinction.

Two different things, both called a homestead exemption

If what you actually want to know is whether a creditor can take your house, that is the second column and we have written about it separately. Everything below this table is the first column.

Who qualifies

The statute names three groups, and the third is narrower than people expect:

• A person who is permanently and totally disabled.
• A person who is sixty-five years of age or older.
• The surviving spouse of a person who was permanently and totally disabled or sixty-five or older and who applied and qualified for the reduction in the year of death — provided the surviving spouse is at least fifty-nine but not sixty-five or more on the date the deceased spouse dies.

Read the third one twice. It requires that the deceased spouse had actually applied and qualified in the year they died, and it has an age window on the survivor. A widow of sixty-two whose husband never got round to applying is not in it.

The property must be a homestead owned and occupied by the qualifying person, and the taxes are reduced "for each year for which an application for the reduction has been approved". No application, no reduction — however obviously someone qualifies.

The numbers in the statute are not the numbers

Anyone quoting a flat figure for this reduction is quoting the printed baseline. The statute puts the real figures somewhere else entirely:

So the income threshold printed as thirty thousand dollars, and the twenty-five thousand dollars of true value that drives the reduction calculation, both move every year on the gross domestic product deflator, rounded to the nearest hundred, and are certified to your county auditor by the first of December for the following tax year.

For completeness: the reduction itself is calculated as the product of four things — the adjusted twenty-five thousand of true value, the assessment percentage set by the tax commissioner (not to exceed thirty-five per cent), the effective tax rate used for the current year, and a factor of one minus the sum of certain other percentage reductions the property already receives. It is not a flat discount, and two houses with the same qualifying owner can get different amounts.

The part that matters when you sell

Here is the provision with the practical consequence, and it is short:

The reduction continues automatically — but only for each year in which the dwelling is the applicant's homestead. It is tethered to the qualifying person and their occupancy of that home. It is not a characteristic of the property that a new owner picks up at closing.

The practical effect for a sale is worth stating plainly. If your parent has held this reduction for fifteen years, the tax figure on their bill reflects it. A buyer who is forty-five does not qualify, and on the same house in the same year their bill will not carry that reduction. So the historic tax figure is not a reliable guide to what the property will cost its next owner — and a buyer who assumes otherwise is in for an unwelcome surprise.

The duty nobody mentions

There is an obligation sitting in the application section that matters most in exactly the situation this site sees constantly — an older owner who moves into care.

If, in any year after an application has been filed, the owner does not qualify for a reduction on that homestead, the owner shall notify the county auditor that they are not qualified. That is a duty on the owner, not something the county is expected to discover.

We are deliberately not going to tell you whether a move into a nursing home ends homestead status. The statute conditions the continuing application on the dwelling being the applicant's homestead, and whether a particular move ends that depends on facts — permanence, intention, whether the home is kept available. What we will say is that it is a question worth asking the county auditor directly rather than leaving unexamined, because the duty to speak up rests with the owner or whoever is acting for them.

The second reduction, and what we could not pin down

Division (B) of the same section provides a separate percentage partial exemption against qualifying levies. The statute sets a phased schedule — 5.70%, then 8.92%, then 12.15%, then 15.38% "for the third following tax year and every year thereafter" — and a board of county commissioners may by resolution authorise a further partial exemption of up to two and one-half per cent.

The schedule runs from "the first tax year to which this amendment applies". We did not read the enactment note, so we cannot tell you which step of that ladder governs the current tax year, and we are not going to guess at a percentage you might rely on. Your county auditor can tell you which applies.

One genuine difference is worth noting though: unlike the (A) reduction, the (B)(2) reduction has a transfer route. An application under it is filed where the homestead was transferred in the preceding year, and that application is incorporated into the form the county auditor uses to administer conveyances of real property. So the two reductions behave differently on a sale.

Where this leaves your options

• Keep it. If the qualifying owner still owns and occupies it, the reduction continues. If circumstances change, remember the notification duty.
• Repair, then list. No effect on the reduction while the qualifying owner is still in occupation. Improvements can affect valuation, which is a separate subject.
• Rent it out. The dwelling stops being the owner's occupied homestead, which goes to the heart of the continuing application. Ask the auditor before assuming.
• List it with an agent. Expect 5.5%–6% commission plus closing costs. Be careful how the current tax figure is presented in marketing — it is the seller's number, not the buyer's.
• Sell it yourself. Same caution, with nobody else checking the listing copy.
• Sell direct to a cash buyer. No repairs, no cleanout, closing as fast as 7 days and typically around 21 days. We work out the carrying cost on the buyer's basis, which is the honest way to do it.

We will not claim a cash sale nets more. What this article should change is smaller and more specific: when you compare routes, do not carry a reduced tax figure into the comparison as though it will survive the sale. Work out the net each way on the numbers the next owner will actually face.