On January 1, 2026, a new set of rules went into effect in Ohio that fundamentally reshapes how Low Income Housing Tax Credit (LIHTC) properties are valued for property tax purposes. The newly adopted Ohio Administrative Code 5703-25-20 effectively shifts Ohio LIHTC valuation from inconsistent, localized methods to a codified, formula-based administrative regime.
What the Rule Does
Ohio’s new administrative code applies to federally subsidized residential rental property, including LIHTC projects under Section 42, Section 8 project-based properties, Section 202 and 811 housing, and other federal housing programs. The following is a list of the most consequential provisions in the new rule:
- Presumptive Income and Expense Structure: Rather than leave LIHTC valuations to standard appraisal practice, gross potential rent is now based on annual scheduled rents; operating income is calculated as gross potential rent plus other income, minus a presumed 4% vacancy loss and 3% unpaid rent; and operating expenses are presumed to be 48% of operating income (plus utilities, plus a 5% replacement reserve).
- Capitalization Rate is No Longer Negotiated Case-by-Case: The capitalization rate for covered properties is now based on a rate set by the Tax Commissioner, derived from a published multifamily rate as of January 1 of the assessment year. The rule then applies an adjusted capitalization rate, adding a tax additur and subtracting 1% investment risk factor.
- New Statutory Floor on Value: Covered properties under the new rule must be valued at the greater of (a) the appraised value, (b) $5,000 per unit; or (c) 150% of unimproved land value. This creates a statutory valuation floor, even in distressed or underperforming properties.
Practical Effects and Filing Deadlines
Rather than centering LIHTC valuation disputes on issues such as whether to use restricted rents vs. market rents, whether to deduct replacement reserves, selecting appropriate vacancy and expense levels, and selecting proper capitalization rates reflecting restricted income streams, the new rule standardizes the income approach for covered properties, but with important built-in presumptions and new filing deadlines.
- March 1: Property owners/taxpayers of federally subsidized properties under Ohio Revised Code 5713.031, have until March 1 each year to file with the County Auditor certain financial information required for LIHTC reporting and valuation.
- May 15: Challenges to the statutory presumptions discussed above must be formally asserted by property owners at the time of financial reporting (March 1 deadline), and supporting evidence and an opinion of value must be submitted by May 15.
- June 15: If the County Auditor finds the submitted financial/valuation information to be insufficient to overcome the statutory presumptions, the Auditor will provide the property owner an opportunity for an informal meeting before June 15.
- Once the County Auditor calculates the property value, property owners have 21 days to appeal if they disagree with the Auditor’s value conclusion.
- NOTE: The statutory deadline to file property tax appeals in Ohio remains March 31 of each year. If the property owner accepts the statutory presumptions in the new administrative rule, then the March 31 filing deadline applies.
The Bottom Line
LIHTC property developers and owners must be aware of the new filing requirements for federally subsidized housing in Ohio, how to challenge the presumptive levels and standardized capitalization rates, and, generally, reassess their property tax appeal strategy. In a field that has traditionally focused on finding the correct appraisal methodology, the key issues have now shifted to whether statutory presumptions can be overcome, whether the statutory floor controls, and whether challenges to the new administrative rules were timely filed and complete.
If you have questions about whether your property is over assessed and need advice on how to navigate the new Ohio rules for LIHTC properties, Jones Pyatt Law can provide a property-specific analysis and advise on best approaches to the new procedural landscape. We represent commercial real estate owners and operators to reduce and mitigate property tax burdens in OH, MD, PA, IN, MI, MO, TN, and KY.