Tax abatements are prevalent in many states, including Ohio. Specifically, this can be a huge incentive when purchasing or renovating a home. If you are unfamiliar with these programs, you may be wondering how they work and benefit you. Essentially, these are all good questions if you’re planning to build a home in the city! Additionally, we specialize in building custom homes in the city limits of Cincinnati. As a result, we have a lot of experience with the city’s abatement program. Next, read further to discover what tax abatements are, the benefits, and the requirements in Cincinnati, OH.
What is Tax Abatement?
Tax abatement programs are prevalent in many areas, including Cincinnati, OH. Essentially, these programs provide financial incentives via tax exemptions that reduce property taxes. Specifically in Cincinnati, this incentive is affected by the level of LEED certification for new and remodeled homes. As a result, homeowners only pay taxes on the pre-improved home value or land for up to 15 years. Finally, the simple goal is to benefit the city by incentivizing individuals to build high-quality, sustainable homes in Cincinnati. Consequently, with the construction of these homes, the city enjoys several direct and indirect benefits.
Homeowner Benefits
Save Money
The money saved via property tax reductions is significant, making it the biggest benefit for homeowners. As a result, tax abatements either save homeowners money on their new homes. Alternatively, homeowners can reinvest money saved into more square footage or higher-end finishes. Here at Redknot Homes, we can help to maximize this incentive with our building processes. Ultimately, when a tax abatement is guaranteed from the beginning of a home’s conception, homeowners feel secure in their investment.
Improves Resale Value
A current tax abatement can increase the resale value since the abatement transfers with your home’s sale. Essentially, buyers are more eager to make an offer on a home that can save them money on property taxes. By saving on property taxes, they may be able to afford a more expensive home. Additionally, for homes to qualify for abatement, they must be LEED-certified homes. These homes are increasingly popular and save homeowners money on energy costs.
Increases your Return on Investment
Abatement eligible neighborhoods consistently experience tremendous growth at quicker rates, making your property more valuable in the process. For example, when the home was first built, the neighborhood was up-and-coming. However, five years later, an entire community of homes, shops, etc. has blossomed around the home. Suddenly the home’s resale value has increased significantly.
Energy Cost Savings
LEED-certified means “Leadership in Energy & Environmental Design” which benefits the homeowner in energy cost savings from building efficiencies. Water bills, electric bills, and gas bills of LEED-certified homes are significantly less expensive than similar-sized, uncertified homes. Ultimately, LEED homes are also very attractive to potential buyers down the road.
Community Revitalization
Attracting and retaining city residents stimulates community revitalization causing a ripple effect of benefits for the homeowner and city. These benefits include beautification of the neighborhoods and increased economic growth. Ultimately, cities are constantly changing and growing. As a result, new homes in the city often play a large role in improving entire neighborhoods and districts.
TAX ABATEMENT ON LEED-CERTIFIED HOMES
Firstly, longer tax abatement periods and higher reductions are achieved for properties that meet Leadership in Energy and Environmental Design (LEED) standards. The lowest level of LEED certification is simply LEED, then LEED Silver, Gold, then Platinum. Accordingly, with Platinum being the highest level of certification, it comes with the longest abatement period and highest reduction. In fact, clients can choose what level they want to achieve based on what makes sense for their needs.
Secondly, each level of LEED Certification has specific requirements that must be met for the project to qualify for certification. Since Platinum is the highest level of certification, it has a longer list of requirements than lower LEED levels. Furthermore, learn more about LEED homes and the levels as outlined by the US Green Building Council on their website.
Thirdly, LEED homes benefit homebuyers and the environment. This is why Redknot has focused on creating homes with these guidelines in mind. For example, the chart below to better understand how LEED certifications can affect Cincinnati tax abatements. The chart below is for projects started after January 1st, 2022. The City Council of Cincinnati passed new abatement limits and conditions that are reflected in this chart. Visit www.cincinnati-oh.gov for the City of Cincinnati™s tax abatement overview.
New Construction Chart Post January 1st, 2022
| LEED Level Qualification | Cap | Term (Years) |
| Non-LEED Certified | $200,000 | 10 |
| LEED Certified | $200,000 | 12 |
| LEED Silver | $400,000 | 15 |
| LEED Gold LBC Net Zero | $500,000 | 15 |
| LEED Platinum / LBC Full Cert | $650,000 | 15 |
| Bonus Criteria (Can be added to any tier) | Additional Cap Increase | |
| Visitability | $100,000 | |
Savings Example
How much money can you save with a tax abatement in Cincinnati? That is a very broad question that depends on several variables. Here is an example to illustrate savings along with some assumptions:
Land Value = $100,000
Building Value = $600,000
Total Home + Building = $700,000
Effective Tax Rate = 2.58%
LEED Gold Certification = this means a $562,000 abatement for 15 years in Cincinnati
Property Taxes without a tax abatement (annual) = $18,060
Property Taxes with a property tax abatement (annual) = $2,580
Annual Savings = $15,480
15 years Savings = $232,200
For more information on the City of Cincinnati tax abatement program (aka Community Reinvestment Area), please visit https://choosecincy.com/resources/communities/. This abatement program was updated with current rates as of January 2022.
Abatement Calculator
Use our tax abatement calculator to find property tax savings with a LEED-certified home in Cincinnati. This calculator assumes a 2.58% tax rate, a 4% interest rate, and a 30-year loan. Because tax rates vary slightly depending on location; this calculator is for illustration purposes only. Adjust the land value and structure cost to equal your total project spend. Additionally, adjust the LEED Tax Abatement to the level you wish to certify at Silver, Gold, or Platinum.
For assistance with the calculator or a building project, please contact us.
Expert City Home Builders at Redknot Homes
Redknot is an expert at utilizing detailed processes in order to ensure that LEED-certified requirements are met. Ultimately, when all requirements are met, clients capture this valuable abatement incentive! Specifically, Redknot has never missed a LEED certification goal. As a result, every new homeowner has received the full tax abatement that they sought.
Not only are we experts at crafting LEED-certified homes, but also build in completely unique landscapes. Often, it can be difficult to find a suitable home site in an already developed city. However, we are regularly searching for and acquiring home sites that are in tax-abatement-eligible neighborhoods. Ultimately, city building is our niche. As a result, we know the ropes and handle all the details of building an eco-friendly, tax-abated home.
Processes We Focus On
- LEED certification “ LEED, LEED Silver, LEED Gold, LEED Platinum
- Abatement process with the city
- Mandatory inspections to qualify
- Filling out all of the tax abatement paperwork with the city
While we handle the dirty work, you can focus on designing the custom home of your dreams. Additionally, with your abatement savings, you will choose how to spend all that extra money! Essentially, clients can build a larger home and/or add luxurious features due to savings on property tax.
About Redknot Homes
Located in Greater Cincinnati, Redknot Homes specializes in the construction of custom, semi-custom, and luxury estate homes. We want to help build your dream home! Specifically, our homes are timeless, beautiful, spacious, innovative, and functional. Additionally, our homes are well-constructed, with high-quality craftsmanship, attention to detail, and luxurious options tailored to your tastes. Furthermore, we have a top-tier team of industry experts on our staff. These team members bring organization and sophistication to our clients’ homebuilding experience. Additionally, with the ability to build 100% custom homes, we are able to design any style and design imaginable.
Contact Us
Finally, working with a designer to create your home is the first step in our 7-step building process. Ultimately, to keep your project on track and within budget, we prioritize complete transparency. For example, we focus on frequent communication and our detailed pre-construction process. To keep up with our latest news, homes, and services, subscribe to our monthly newsletter and blog. Specifically, if you’re interested in learning more about our pricing and available homesite, fill out our contact form.
