by Erin LaBuda

A question many buyers ask me when we are touring different Central Ohio communities is: what determines the tax base and "real" property value?

Property taxes -- the principal source of revenue for cities, counties and school districts -- are calculated by multiplying the nominal property tax rate by the assessment ratio (the percentage of the value of the property that is taxes) by the value of the property. Ohio's tax rate averages 1.34% of property value (source: MSN.com) -- 15th in the country.

Real property tax rates vary with the taxing jurisdiction. The total tax rate includes all levies enacted by a legislative authority or approved by the voters for all taxing jurisdictions in which the property is located (e.g. county, township, municipality, school district). A particular school district may place a levy on the ballot, which will increase the property taxes for homeowners living in that school district. It is then up to the voters to determine if the proposed increase is necessary to provide the school district with adequate funding to maintain a certain level of excellence. If the levy fails, the school district receives no additional funding. If it passes, a homeowner's property tax goes up and the schools receive their funding.

Why, many buyers ask, do the property taxes vary so much from one Central Ohio community to another? There are many factors that affect property value, but the primary one is the quality of the schools.

With funding for things like extra-curricular activities, advanced placement courses, extensive course offerings, infrastructure maintenance and teacher recruitment, the desirability of a particular community increases. This, in turn, creates a higher demand for properties in that school district. Other factors that create demand for a particular community are things like access to shopping, recreational facilities, arts centers, local area businesses and community programs. All of these factors directly impact property value because the demand to live in communities with these benefits will always be high.