Home Work

A New Year and the Fights Continue

Another holiday season has passed. Thoughts of peace and goodwill toward all are hoped for as we embark upon a new year. Our soggy-eyed memories recall the successes of the past year and lead to the hope that the coming one will endow us aplenty with even more dream fulfillment.

Some of us will entertain hopes that our community leaders will drop the heavy gloves and begin sparring with a gentler civility, engaging in a discourse that respects the opposition. Unfortunately, that's not going to happen this year.

The battle lines have been drawn, with Cincinnati City Council on one side and the Hamilton County Auditor on the other. The issue is, of course, taxes and a proposed credit the city wants to give homeowners.

To improve upon the dismal homeownership rate in the city, Councilman David Pepper is proposing a change in Ohio law that would allow Cincinnati to give homeowners a tax break when the city has a budget surplus. Although the city is facing a deficit this year, there have been surpluses in the past, and Pepper believes that this surplus money should be returned to homeowners via a credit on their property taxes.

In his view, such a move could dramatically increase homeownership.

Because the city does a lot for businesses with a multitude of tax breaks or incentives, it's Pepper's belief that the time has come for the homeowner to share in the benefits during these times.

Opposed to this is fellow Democrat and longtime county auditor, Dusty Rhodes, who argues that such a change will cause an "accounting nightmare." He says that administering the program would be costly, complicated to implement and require additional funding from the city, which hasn't been proposed.

In an 8-1 vote in October, council agreed to proceed with the change in the state law that would allow the city to offer the tax credit. Rhodes intends to use the county auditor's lobby to fight the proposal, fearing that if Cincinnati is successful other cities in the state will follow and stating that "every auditor will be against this."

From Pepper's perspective, cities will hold or spend money when they have a surplus instead of returning it. With the homeownership issues facing the city, anything that can increase those numbers should be implemented.

Pepper sees no reason why the county auditor couldn't implement the credit, since the county has no problem doing it with the stadium revenue. He quoted Rhodes' own words from 1997 when the auditor was talking about the county's tax credit, saying, "Anything that can reduce the property tax is salutary. When the county did it with the stadium revenue, Dusty thought it was a good idea. We should be able to do it when we have a surplus. We just need to get it through the Statehouse."

But according to Rhodes, if the city is truly interested in giving homeowners a tax break it should simply roll back property taxes instead of collecting the taxes and then returning some of money back via a tax credit.

Pepper points out that in October council did pass a rollback, but property taxes won't decrease. Under the new rate, the owner of a $100,000 home will pay $14 a month more in property taxes — a $4 decrease from the old rate. Because of the current fiscal deficit facing the city, a majority of council rejected a larger rollback, and City Manager Valerie Lemmie recommended no rollback at all.

Maybe by this time next year the issue will be resolved and I'll be able to cut this issue as a discussion topic and won't need to roll back over the year to see what our leaders accomplished.

Amazing, isn't it? It's only January and I already have one item to place on next year's resolutions-to-do list.

THIS WEEK'S TIP: Owning a Home Offers Advantages (Part 2)
You accumulate home equity, which is the amount a property is worth beyond what's owed. For example, if you owe $70,000 on your home and buyers indicate they'll pay $100,000 for it, your equity is $30,000.

After you've made mortgage payments for a few years, you will begin to accumulate home equity in two ways: 1) the value of your home will probably increase as a result of appreciation, and 2) you will have paid off part of the mortgage. The longer you make payments, the more home equity you accumulate.

The way you maintain your home will also affect the amount of equity. Because of this equity, your home is an investment, which allows you the opportunity to borrow additional money for home maintenance and repair using funds from home equity loans or second mortgages.

Interest paid on your mortgage is tax deductible. Mortgage interest deduction is one of the last remaining tax breaks offered. Real estate taxes on personal residences are also deductible from your federal taxes.



Home Work is a weekly column geared toward residential real estate.

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