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Cincinnati Tax Abatement: New Builds and Renovations

Updated: Mar 7

Change is on the horizon in Cincinnati. A decades-old tax abatement policy is up for debate, with officials pledging to roll an updated and revitalized system.

Historically, residential tax abatements have offered the same 10 to 15-year residential tax abatements to homeowners equally in every neighborhood. While the program requires city council approval, with gaining popularity; if the new program is passed, it will start on September 1, 2023. Frazier Homes seeks to communicate the tax changes to anyone who wants to benefit, both disadvantaged and affluent neighborhoods.

With a vested interest in housing equality and access, Frazier Homes prides itself on providing insight and perspective into the latest issues and opportunities in the world of home building and real estate.

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What Is Tax Abatement?

A tax abatement is a temporary reduction of property taxes. As it currently stands, tax abatements are granted for 10 to 15 years to homeowners who spend at least $5,000 to renovate or rebuild their properties with a cap of $900,000 on building and repair.

Cincinnati's residential abatement program began in the 1970s before being applied to all 52 neighborhoods in 2002. Today, regardless of income level, home value, or the neighborhood's poverty rate, tax abatements are available to everyone in Cincinnati.

Tax abatements, whether residential or commercial, spur building and renovations in communities with such incentives.

Basically, abatement works like this: the city taxes the property as if the improvement never occurred. So, if someone adds $350,000 worth of improvements to a $150,000 house, the house is still taxed as if it were worth $150,000. With these changes, huge incentives may be possible, particularly in new construction scenarios.

What does Cincinnati Tax Abatement Apply to?

Abatement currently applies to all of Cincinnati’s neighborhoods. The program is, however, limited to rehabilitation or new construction of condominiums, one, two, three, or four-unit, residential-only structures.

All condominiums and one-, two-, or three-unit structures within the City of Cincinnati—new construction or rehab—may apply for the tax abatement program. A minimum of $2500 for one- and two-unit structures and $5000 for three-unit structures must have been spent on eligible activities. The Hamilton County Auditor’s Office determines the abatement amount based on the type of improvements.

Qualifications for Cincinnati Tax Abatement

The new proposed Cincinnati Tax Abatement system would be a three-tier system targeting incentives to communities with the greatest needs. Incentives are based on six definable criteria, requiring review and readjustment every three years. Criteria include average household income, poverty rate, housing value, mortgage applications, market value change, and new construction permit activity.

With the proposed new changes, the three tiers would have different incentives for different areas.

Tier One neighborhoods would include areas such as Hyde Park and Mount Lookout and would receive the least amount of incentives based on the above criteria. Tier Two would receive more incentives than Tier One and include neighborhoods such as California, Downtown, and East Walnut Hills. Tier Three would get the most incentives and include the rest of the city’s neighborhoods.

How to Apply for Cincinnati Tax Abatement

To apply for the CRA Tax Abatement Program, applicants need to submit an application to the City of Cincinnati Department of Economic Development. Applicants renovating existing residential structures must pay an application fee of $250.00, which may be paid by check, to the “City of Cincinnati.”

Changes will likely include a streamlined online application and targeted outreach directly to underserved communities.

A Reform of Tax Abatement: What This Means for Cincinnati and New Builds

Historically, Cincinnati’s tax abatement program has provided welcomed incentives for property owners to perform renovations or new builds.

The goal of the tax abatement reform effort in Cincinnati is to expand growth to communities

More information on Cincinnati's current residential tax abatement incentives can be found here. To fill out a tax abatement application, click here.

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