Ohio’s Homestead Exemption program about to change

SALEM, Ohio — Senior citizens who look forward to a property tax break at 65, known as the Homestead Exemption, could soon find themselves ineligible if they make more than $30,000 a year.

Seniors who are currently eligible for the program will continue to receive the exemption, according to the Ohio Department of Taxation. However, starting with the 2014 tax year, new seniors who apply will be eligible only if their household income is less than $30,000.

How it started

The exemption dates to 1970, when Ohio voters approved a constitutional amendment permitting a homestead exemption that reduced property taxes for lower income senior citizens.

The exemption typically exempts a homeowner’s first $25,000 of property value from taxation, saving homeowners $300-400 a year.

In 2007, amid an economic recession, the Ohio General Assembly expanded the program to include all senior citizens, regardless of their income. The Taxation Department said the cost of the exemption was $70 million in 2006, when the income qualification was still in place. The lost revenue grew to $410 million in 2012, and is projected to be $533 million in 2018.

“The state budget cannot sustain this kind of growth,” according to information on the Ohio Department of Taxation’s website.

New challenges

But some Ohio lawmakers are concerned that homeowners will not be able to sustain the new expense, which could cost a few hundred more dollars in annual property taxes.

Rep. Nick Barborak, D-Lisbon, has introduced legislation that would essentially abolish the $30,000 threshold. Barborak, as well as Sen. Lou Gentile, D-Steubenville, who introduced legislation in the Senate, both seek to repeal the changes.

“This is a situation where we have created a threshold of $30,000 arbitrarily,” Barborak said. “It was snuck into the budget literally in the dark of night.”

The idea behind the Homestead Exemption, he said, was to “help our seniors in the twilight of their lives (to) remain in their home.”

He’s heard from some constituents who estimate they will pay at least $400 more a year in property taxes, and are unsure how they’ll manage.He has concerns about recent tax changes in the state budget.

“The vast majority of tax relief went to wealthiest of Ohioans,” he said. “… I think this has been regressive tax shift.”

Barborak’s legislation, H. B. 267, was introduced Sept. 17. It has not yet been assigned to a committee or received formal votes.

The Senate bill, S.B. 180, was introduced Aug. 27, and has not been voted upon.