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Cincinnati Residential & Commercial Tax Abatement

 

City of Cincinnati LEED-CRA Residential Property Tax Abatement (as of June 2011)

The LEED-CRA (Community Reinvestment Area) residential property tax abatement offers property tax incentives to encourage new construction and rehabilitation of condominiums, one, two, and three unit residential structures in the City of Cincinnati.  The abatement is available to any project that meets the US Green Building Council Leadership in Energy and Environmental Design (LEED) for Homes Certified, Silver, Gold, or Platinum standards.

All new LEED construction of residential structures are eligible for a 15-year, 100% tax abatement on the new home,valued up to $546,400, and only pay tax on the land.

For renovated LEED residential dwellings there is a 10-year tax abatement on the value of the improvements up to a maximum $546,400 market value.  Owners will pay tax on the land.  A renovated house’s market value limit will increase by 3% compounded each year.

A renovation project must be characterized as “substantial” gut/rehabilitation to participate in the LEED program.  In order to qualify as a gut/rehab and meet all the LEED prerequisites, a project must replace most of the systems and components (e.g., HVAC, windows) and must open up the exterior walls to install Energy Star specified air infiltration & insulation measures.

Residential structures with four or more units are classified as commercial buildings and may be eligible for incentives under the city’s commercial LEED program, but not the residential program.

Additional information regarding the LEED for Homes standards can be found on the US Green Building Council website: USGBC

There is no maximum value limit for new or renovated residential structures certified with the LEED Platinum standards.

In addition to the abatement savings, homeowners can expect an additional 15-30% energy savings with a LEED certified home.

Fees: There are no processing fees charged within the residential abatement program.

The Hamilton County Auditor's Office determines the abatement amount based on the type of improvements.  A letter from the Hamilton County Auditor's Office will be received after the Auditor's appraisal has been completed.  The period for tax abatement begins with the date of documented completion of work.  Also upon completion of a new home or renovation project, the property owner must receive the LEED for Homes Certification from the USGBC before the tax abatement will be applied.  An increase or decrease in taxes during the abatement period may result when voted changes in tax rates, state-mandated reappraisals, or updates reflecting neighborhood trends are adopted.

If during the term of the abatement a residential structure is sold, the abatement may be transferred to the new owner.

City of Cincinnati LEED-CRA Green Commercial Tax Abatement (as of June 2011)

The City of Cincinnati offers a 100% property tax abatement for commercial projects achieving Leadership in Energy and Environmental Design (LEED) commercial certification through the US Green Building Council. The abatement is offered for new construction or renovation of commercial or multi-unit (4 or more units) residential space.

All new LEED construction of commercial structures are eligible for a 15 year, 100% tax abatement on both the structure and land,and there is no value limit for commercial properties.

For renovated LEED commercial structures there is a 12-year tax abatement on the value of the improvements, and no market value limitation.  Owners will pay tax on the land.

The Owner of a commercial property must also enter into an agreement with the local Board of Education district to pay the board an amount equal to 25% of the avoided property taxes.  Therefore, the maximum abatement, net of a payment to the school district, is 75% of the new taxable value.

The one exception to the USGBC LEED “Commercial” certification program is with respect to Mixed-Use buildings.  If a mixed-use building, up to 3 floors, includes non-residential space and at least 40% residential space it may be certified under the LEED “for Homes” program.  For example, a building with retail establishments on the 1st floor and residential units on the 2nd & 3rd floors is a mixed-use building within the USGBC’s program, and would be eligible for the City’s commercial tax abatement with the LEED for Homes certification. 

Fees:
There is a one-time $750 application fee payable to the Ohio Department of Development. There is also an annual fee of 1% of the value of the abatement (minimum $250/maximum $2,500)

How does a CRA Abatement work?
Suppose a business enters into an agreement with the City to invest $1 million to renovate its commercial property. In this case, the abatement is for a 12-year term.

Renovation (no max)

Commercial

Market Land Value

$1,000,000

Market Value of Improvements

1,000,000

Market Value of Renovated Building

$2,000,000

Tax base on Market Value of Improvements (35%)

$350,000

Commercial tax on property (0.079877758, as of June ’11)

27,957

School district payment (25% of new taxable amt)

6,989

City administrative fee (1% of new taxable amt)

280

Net Annual Tax Abatement

20,688

Net Abatement, 12-year term

$248,256

 

 

In addition to the abatement savings above, the building owner (and/or building occupants) can expect an additional 15-30% energy savings with a LEED certified building.

 

Which projects are eligible?  1. Company must make a minimum investment of $40,000. 2. An application and agreement between the property owner and the City must be executed with the City’s Department of Community Development before construction begins (The process may take up to 2 ½ months to complete).

The Hamilton County Auditor's Office determines the abatement amount based on the type of improvements.  A letter from the Hamilton County Auditor's Office will be received after the Auditor's appraisal has been completed. The period for tax abatement begins with the date of documented completion of work.  An increase or decrease in taxes during the abatement period may result when voted changes in tax rates, state-mandated reappraisals, or updates reflecting neighborhood trends are adopted.

If during the term of the abatement a commercial structure is sold, the abatement may be transferred to the new owner.

The information regarding the City of Cincinnati tax abatement was updated in June 2011 but is subject to change.  If you would like additional information please contact us or the City of Cincinnati Department of Community Development.