What is The Rocky River Homestead Credit?

(A Program to be enacted 1/1/2020; Proposed by City Council Candidate Robert E. McRae CPA)

The RRHC will provide property tax relief to retirees, and protect them from 15-20% annual increases in their property tax bills due to rising property values during their retirement years.

Under this proposed program, homeowners who already qualify for the Ohio Homestead property tax credit will receive an additional tax rebate from the city of Rocky River.

The credit will be calculated as follows:

Appraised property values will be “frozen” at the date the taxpayer becomes eligible for the Ohio homestead credit. Approximately 2,000 resident homeowners are projected to be eligible.

A taxpayer’s adjusted tax bill will be recalculated, using the frozen appraised rate. As a result, RRHC participants will not experience any property taxes increases during their retirement years, as long as they continue to own their home.

The RRHC participant will receive a tax rebate check once per year, to refund the overpayment. The overpayment will be reduced to represent only the portion of a taxpayer’s real estate bill collected for Rocky River city taxes (approximately 21% of the total)

A typical RRHC participant will receive a refund of approximately $250 per year on a home appraised at $200,000 at age 65 but $250,000 presently

The RRHC will be tax neutral to the City, .The $500,000 annual decrease in city property tax revenues will be paid for through stricter enforcement of the appraisal appeals process. Fewer valuation reduction appeals will be granted.

Takeaways from the 2019 Tax Return Prep Season

2019 was the first tax year where taxpayers saw the impact of the new federal tax regulations on their filed income tax return. “Don’t shoot the messenger” was commonly spoken by CPA’s and tax professionals when they delivered completed tax returns to their clients, especially for taxpayers with gross income of $100,000 or less. Some taxpayers paid more tax, many others paid less, but everyone seemed to be surprised and unprepared for the change in their refund or tax due amount in 2019.

The main cause of this was that In 2018 employers reduced the rates of federal and state withholding tax that they withheld from the paychecks of salaried employees, so taxpayers who normally received a $5,000 refund when they filed suddenly received only a $3,000 refund in the spring of 2019.

Another big cause that, since the overall structure changed on form 1040, many deductions were no longer allowed, and were replaced by increases in the standard deduction and dependency exemptions.. Taxpayers who were accustomed to taking itemized deductions were no longer eligible to do so.

Were you surprised this year? I welcome your comments. E mail me at mcrae@robertemcrae.com.

Robert E. McRae CPA