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In 2017, we saw an uptick in Ohio real property tax exemption denials for skilled nursing and assisted living facilities seeking exemption as a home for the aged under Ohio Revised Code §5701.13. Each time, the Tax Commissioner cited the facility’s failure to comply with subsection (e) of the statute, which requires that homes for the aged provide “services for the life of each resident without regard to the resident’s ability to continue payment for the full cost of the services.”
The Tax Commissioner seems to be evaluating compliance with that section under a new, heightened standard. When determining whether an applicant has retained any ability to terminate based on a resident’s inability to continue payment, the Tax Commissioner looks at the applicant’s admission or residency agreement. However, the Tax Commissioner has never provided model language, so many facilities have maintained language that was previously approved.
The Tax Commissioner change in position has come without notice and has resulted in denials for entities that previously received exemption as a home for the aged. Of particular concern is that the Tax Commissioner has found previously acceptable language to be insufficient, despite approving identical language for the same entity in the past.
Given the Tax Commissioner’s changing interpretation, it is particularly important to work with legal counsel to increase the chance that your application will be approved. Since the Tax Commissioner looks at the relevant documents that were in place on January 1 of the year for which exemption is sought, this will require a certain amount of planning. Thus, if you foresee any construction, additions, or extensive renovations to your currently exempt property or plan to seek exemption on non-exempt property in 2018, we recommend contacting counsel immediately.
ROLF would be happy to review your admissions agreement and recommend language based on the latest interpretations coming from the Tax Commissioner. Please contact Aric Martin or Allison Lansell for more information.
Please note that this post is intended to be informational only, and is not intended to be nor should it be relied upon as legal advice. Rolf Goffman Martin Lang LLP will not be responsible for any actions taken or arrangements structured based upon this post. The receipt or review of this post by an organization that is not a current client of Rolf Goffman Martin Lang LLP does not create an attorney-client relationship between the recipient and the law firm.
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