CPA & Business Advisory Blog

Multiple homes in Florida and Ohio

Ohio and Florida Homestead Credits

Florida/Ohio Real Estate Taxes

A little known real estate tax credit that every Ohioan receives is causing issues for the numerous Ohioans who claim Florida as their residence but still maintain a home in Ohio. Every individual that owns real estate in Ohio receives a 2.5% Owner Occupancy Credit on their Ohio real estate tax bill. Most Ohioans are not even aware that they receive this credit. (This is different from the homestead credit that is also available in Ohio.)  To receive the rollback credit, you must be residing in the home.

Florida also offers a homestead credit that is much more significant than the Ohio rollback credit. The homestead credit caps the increase in your home value yearly. However, if a Florida resident receives any type of real estate credit for homes owned in other states, certain Florida counties will deny that resident the Florida homestead credit. Florida counties are also issuing potential assessments for the money the individual has saved on real estate taxes by taking advantage of the Florida homestead exemption; the Florida homestead credit is also being denied on a go forward basis for the individual. All of these actions by various Florida counties are definitely impacting Ohio snowbirds.

To rectify this situation the taxpayer must pay back the rollback credit that has been received over the years from the Ohio county. Generally, this is going to be significantly lower than the potential assessment from Florida—this might not be the case if the value of the home in Ohio is more significant than the home in Florida.

Also, it is important to note that if you own residential real estate in Ohio, you also will be receiving this 2.5% rollback credit on the rental real estate. Technically, you are not entitled to this credit because you are not residing in the home.

Related: The Changing Landscape of State and Local Taxes

Internet Tax Freedom Act: Ohio Among States to Lose Internet Access Fee Income

In February 2016, President Obama signed a law that permanently enacted the Tax Freedom Act. After being extended numerous times, this permanent measure prohibits states from taxing Internet access fees. Before anyone gets excited, this legislation still does not exempt purchases made over the Internet; it only prohibits states from taxing Internet access fees. Ohio is currently one of seven states that still impose a sales tax on Internet access fees for business, though Ohio does exempt access fees paid by individuals. Ohio and the other six states that tax Internet access fees have been grandfathered as part of the Tax Freedom Act for the last several years, so Ohio was able to continue to tax these fees. The other states that tax Internet access fees are: Hawaii, New Mexico, North Dakota, South Dakota, Texas and Wisconsin.

As part of the permanent measure, the seven states must stop the collection of the tax on Internet access fees by June 2020.  In 2014, Ohio collected $65 million in sales tax on Internet access fee. The unknown question at this point in time is how Ohio is going to make up this lost revenue. Skoda Minotti will continue to monitor the situation in Ohio to see what steps lawmakers take to address this eventual revenue loss.

Massachusetts Amnesty

The Commonwealth of Massachusetts is currently offering an amnesty program that runs from April 1, 2016 through May 31, 2016.  Amnesty is currently available to both businesses and individuals that have delinquent tax obligations with the state of Massachusetts.  The amnesty program limits the lookback period to three years.  Also, as part of amnesty penalties will be abated and any interest due on the penalties will be forgiven. Once amnesty expires Massachusetts has indicated it will utilize its entire means to find delinquent taxpayers.

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