I am working on an offer for a park in Hamilton County Ohio and I hit a roadblock. I spoke with a commercial appraiser in the county auditor’s office regarding a potential increase in property taxes upon purchase. He explained that property assessments are revalued every three years, but where there is a large discrepancy between the assessed value and the sale price (i.e., market value) it is likely that the school board will petition the auditor to revalue the property outside of the three year window which may result in the assessed value being close to or equal to the sale price of the property. Unfortunately, the park I am looking at was purchased years ago as a distressed park and it is now stabilized so there is a large discrepancy between the assessed value and the potential purchase price.
My question is if anyone has had experience with purchasing a park in Hamilton County and if so, how was the revaluation handled? I’m hoping to confirm what the commercial appraiser told me or find a different perspective on this issue.
The current assessment means nothing. For your pro-forma estimate of income you need to apply the current tax rate to whatever the new assessed value will be. Commercial property is usually reassessed at FMV upon transfer of ownership.
hamilton county is not the best in order to deal with. the taxes will likely go up as they are obviously been awhile since the park was sold. Like brandon said, that is the answer for sure.
You could do a reassement but thats above me in terms of how to go about and the mechanics of it.
My experience is that Brandon is right, you should underwrite the deal assuming the worst in terms of property tax assessment. I’ve underwritten deals in areas where properties aren’t triggered for reassessment by sale, but rather are put on a 4-5 year reassessment cycle. So you may be able to get a break for a few years at least. Also the assessor may have a “batch update” type algorithm they go off of where actual recent sales price isn’t even incorporated. All depends on the local muni, and they’re not going to give you a straight answer as to their process so the best way to find out is to ask other property owners in the area.
Just in general, an appraiser will usually base the projected expenses on any property on a re-appraisal at acquisition. And, of course, the projected expenses will influence the appraised value.
If I were you I’d assume the park will be assessed at market value when it changes hands.
As stated, expect a large increase in taxes. There are ways around it to avoid deed transfer and requires attorneys but it’s not without some risk. This is my backyard so if you are interested in co-investment, please let me know.