Ohio Admin. Code 5703-25-07 - Appraisals
(A) Each general
reappraisal of real property in a county shall
will be
initiated by an entry and order of the tax commissioner directed to the county
auditor of the county concerned which shall
will specify the
time for beginning and completing the appraisal as provided by section
5715.34 of the Revised Code. In
January of each year the commissioner shall
will adopt a
journal entry wherein is set forth the status of reappraisals in the various
counties and the tax year upon which the next reappraisal and the next
triennial update of real property values in each county
shall
will be
completed.
(B) Each lot, tract, or
parcel of land, and all buildings, structures, fixtures, and improvements to
land shall
will be appraised by the county auditor according to
true value in money, as it or they existed on tax lien date of the year in
which the property is appraised. It shall
will be the duty
of the county auditor to so value and appraise the land and improvements to
land that when the two separate values for land and improvements are added
together, the resulting value indicates the true value in money of the entire
property.
(C) Land
shall
will be
valued in accordance with the provision of rule
5703-25-11 of the Administrative
Code. All land shall
will be valued according to its true value except
where the owner has filed an application under section
5713.31 of the Revised Code for
such land to be valued for real property tax purposes at the current value the
land has for agricultural use, and the land is qualified to be so valued and
taxed as provided in section
5713.30 of the Revised Code.
Buildings, structures, fixtures, and improvements to land
shall
(D) In arriving at
the estimate of true value the county auditor may consider the use of any or
all of the recognized three approaches to value:
(1) The market data approach - The value of
the property is estimated on the basis of recent sales of comparable properties
in the market area after allowance for variation in features or conditions. The
use of the gross rent multiplier is an adaptation of the
m-arket
market
approach useful in appraising rental properties such as apartments. This is
most applicable to the types of property that are sold often.
(2) The income approach - The value is
estimated by capitalizing the net income after expenses, including normal
vacancies and credit losses. While the contract rental or lease of a given
property is to be considered the current economic rent should be given weight.
Expenses should be examined for extraordinary items. In making appraisals by
the income approach for tax purposes in Ohio provision for expenses for real
property taxes should be made by calculating the effective tax rate in the
given tax district as defined in paragraph (E) of rule
5703-25-05 of the Administrative
Code, and adding the result to the basic interest and capitalization rate.
Interest and capitalization rates should be determined from market data
allowing for current returns on mortgages and equities. The income approach
should be used for any type of property where rental income or income
attributed to the real property is a major factor in determining value. The
value should consider both the value of the leased fee and the
leasehold.
(3) The cost approach -
The value is estimated by adding to the land value, as determined by the market
data or other approach, the depreciated cost of the improvements to land. In
some types of special purpose properties where there is a lack of comparable
sales or income information this is the only approach. Due to the difficulties
in estimating accrued depreciation, older or obsolete buildings value estimates
often vary from the market indications.
(E) Ideally, all three approaches should be
used but due to cost and time limitations, the cost approach as set forth in
these rules is generally an appropriate first step in valuation for tax
purposes. Values obtained by the cost approach should always be checked by the
use of at least one of the other approaches if possible. In the event the
auditor uses approaches of estimating true value other than the cost approach
appropriate notations shall
will be shown on
the property record.
(F) The
appraiser is urged to refer to standard appraisal references as well as the
excellent publications by many trade associations, etc., which provide valuable
income, expense, and other types of information that may be used as
bench marks
benchmarks in making the appraisal.
(G) Nothing set out in these rules
shall
will be
construed to prohibit the county auditor from the use of advanced techniques,
such as computer assisted appraisals, in the application of the three
approaches to the appraisal of real property for tax purposes. However, such
programs must be submitted to the tax commissioner for the approval on an
individual basis.
Notes
Promulgated Under: 119
Statutory Authority: 5703.05
Rule Amplifies: 5713.01, 5715.01
Prior Effective Dates: 12/28/1973, 11/01/1977, 09/18/2003, 07/01/2021
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