A Florida-based company that owns an office park in Miami Twp. is eligible for more than $8,000 a year in tax credits meant for owner-occupied homes.
A Kettering company that purchases distressed real estate gets the owner-occupied tax credit on 65 properties, including on its offices on South Dixie Drive.
A Pennsylvania-based company that owns an apartment complex on Riverside Drive in Dayton gets a $1,000 a year tax break through the credit.
None of these examples fit the description of who the tax break was designed to benefit: people who live in their own homes. Yet they are among thousands of Montgomery County properties that show up on tax records as getting a tax break they may not deserve.
An I-Team investigation found tax credits were claimed by thousands of registered rentals, business properties or people who claim a primary residence on more than one property.
Montgomery County Auditor Karl Keith pledged a “comprehensive review” of the owner-occupancy tax credit program after the I-Team presented the information to his office.
“It’s wrong any time somebody’s getting a tax break they don’t deserve and others do deserve,” Keith said in an interview. “I’ve directed my staff to do a thorough and complete review of this program and the rental registration program and how those two programs interact.”
“If there’s things we need to do to improve our processes to make sure that only qualified people are getting those reductions, then we’re going to identify those steps and we’re going to be taking corrective action.”
West Dayton resident Kelly Livers said she is very interested to see what Keith’s review finds. She said she complained about the issue to the county auditor’s office but wasn’t taken seriously until she contacted the I-Team.
“Somebody isn’t doing their job,” she said. “We’re held accountable to pay our taxes. They’re held accountable to do the bookkeeping correctly.”
3,600 rentals getting credit
The owner-occupancy credit is a 2.5 percent property tax reduction meant to ease the tax burden for homeowners. It was first created in 1979 and later amended to only apply to tax levies created prior to November 2013.
The state of Ohio reimburses local governments for the reduction.
For most homeowners, the credit amounts to less than $100 a year. But its cumulative impact to the county’s tax rolls is more than $11 million. Of that, the I-Team’s investigation calls into question hundreds of thousands of dollars’ worth of tax breaks. For example:
- The I-Team found 4,949 property owners who appear to own more than one property claimed as a primary residence for tax purposes. The total value of these tax reductions: $680,120.
- 3,616 properties are registered with the county as rental properties yet receive tax credits worth nearly $200,000 combined.
- The listed owners of 1,629 properties have the acronym LLC in their names, suggesting they are owned by limited liability corporations. The combined owner-occupied tax credit on these properties is $93,224.
Doug Trout, director of real estate at the Montgomery County Auditor’s Office, said the tax credit should not be going to companies or rental properties.
“When that was brought up, we started looking at it,” he said. “Every time a property is transferred a person has to let us know, under penalty of perjury, whether they are occupying that property or they are not.”
He said his office reviews property transfers every year and removes thousands of ineligible properties from receiving the tax credit.
More than 146,000 properties currently claim the credit.
Trout said properties that changed hands this year and last year would hopefully be caught by a routine audit at the end of this year and changed before the tax bills go out in 2018.
“We look at it on an annual basis and when we become aware of issue related to that we have legal mechanism, and we constantly strive to improve our processes to make sure we have the most accurate data possible,” he said.
‘I’ll look into it’
Many of the properties identified by the I-Team’s analysis changed hands years ago, not just in the last year or so.
AZZAPN LLC, the national property management company based in Miami Beach that is getting an $8,000 tax credit on the Miami Twp. office park, purchased that property in 2012.
AZZAPN owner Tom Sullivan said he was unaware of the tax issue.
“I’ll look into it,” he said. “Any costs on the buildings that are rented get passed onto the tenant.”
Peter Julian, CEO of Octagon Holdings LLC, the Kettering company that claimed the credit on 65 properties, also said he “had no idea.”
Julian said most of the homes his company owns likely were owner-occupied at one time but were then purchased from a bank or the government through foreclosure proceedings. He said most are rentals, though they haven’t yet been added to the county’s rental registry.
Altogether, the 65 properties received more than $2,000 in owner-occupied tax credits.
Julian said the issue should be reviewed and fixed if necessary.
“If the county can get some additional money, we shouldn’t get the benefit of the tax break or credit,” he said.
‘That’s a vacant home’
Kelly Livers began digging into her neighbor’s property records while contesting the value or her own West Dayton home. In just the few blocks around her lot she found 90 vacant, rental or business properties getting owner-occupied tax credits.
Last week, Livers pointed out some of the properties to a reporter, including several with overgrown weeds jutting out of the foundation and boards covering doors and windows.
“That one. That one. That one. This one. This one. This one. This one, and those two over there are all vacant, and the one across the street, are all vacant homes,” she said. “That’s a vacant home that’s been vacant for at least three years, had all the utilities shut off a long time ago.”
“If (the county) can’t keep their accounting straight on the vacancies and who’s occupying them, then how are they keeping the rest of it straight?” she said.
Auditor’s office officials say some of the mistakes may be innocent: Someone buying a rental property or renting out their home and being unaware of the rules, or someone who lives in part of a commercial or rental property.
The I-Team analysis did not include vacant homes, which officials say pose a unique challenge because vacancy is not reflected in the tax roll.
The auditor’s office has a department that processes registration of rental properties, as state law requires for large counties, but there’s been no effort made to compare the names on rental registrations with those claiming owner-occupancy credits.
“There will be,” Trout said.
‘Many erroneous forms’
There is some evidence the number of improper claims extends beyond Montgomery County.
A 2014 I-Team investigation found hundreds of Clark County property owners who appeared to be receiving the tax credit on multiple properties, totaling thousands of dollars in questionable tax breaks.
Ron Alban, an activist who founded a group called Citizens for a Better Kettering, said the information uncovered by the auditor’s office should be referred to the county prosecutor. The state auditor should also look to see if the same pattern occurs in other counties.
“We live in a society based upon rule of law, and what the Dayton Daily News has uncovered is apparently many erroneous forms have been filed, with the possibility some of them have even perhaps been fraudulently filed,” he said.
“To the extent the facts show back taxes are owed, I would think it would be appropriate to try to collect those back taxes.”
Trout said there is a mechanism for that.
“If we determine that individuals are receiving owner-occupancy and they are not residing there, we do have the ability to go back and recoup that charge,” he said.
“We haven’t done that, but we have that ability.”
Responding to a reader tip, the I-Team analyzed Montgomery County property tax rolls and found thousands of properties receiving a tax break meant for owner-occupied homes that they may not be eligible for. This reporting stems from our local commitment to watching your tax dollars — reporting made possible by your subscription.
By the numbers:
146,394: Number of properties receiving owner-occupied tax rollback.
$11.3M: Total annual impact of owner-occupied tax rollback.
3,616: Number of properties registered as rentals and receiving owner-occupied rollback.
$199,131: Total annual impact of tax rollback on rental properties.
$63.62: Median annual tax break given under rollback.
$8,319: Total annual owner-occupied tax reduction given to company that owns Miami Twp. business park.
4,949: Number of names listed as owning two or more properties receiving owner-occupied tax credit.
Source: Analysis of Montgomery County property tax records
About the tax credit
The “Owner Occupancy Credit” (formerly known as the 2.5 perent supplemental rollback) is a tax reduction program for owner-occupied residential property in Ohio that applies only to tax levies passed or in existence prior to the November 2013 election. Rental properties are not eligible for the reduction. Call 937-225-4326 if you need additional information.
Source: Montgomery County Auditor’s Office website