Tax abatements are prevalent in many states, including Ohio, and can be a huge incentive when purchasing or renovating a home. If you are unfamiliar with tax abatement programs, you may be wondering - What is a tax abatement? Why do cities offer it and how can it benefit me? All good questions if you’re planning to build a home! And guess what, THIS is our specialty, so we can help!

Read further to discover what tax abatements are, how it benefits you as a homeowner, and how it works in Cincinnati, OH.

What is Tax Abatement?

Tax abatement programs are prevalent in many areas, including Cincinnati, to provide financial incentives in the form of tax exemptions which reduce property taxes. In Cincinnati, this incentive is tied to the level of LEED certifications for new and remodeled homes, allowing homeowners to pay taxes only on the pre-improved value, or land value for a new home, of their property for up to 15 years. The simple goal is intended to benefit the City by incentivizing individuals to build high-quality sustainable homes in Cincinnati. With the construction of these homes, the City enjoys a number of direct and indirect benefits from this investment including:

  • Increased future tax base
  • Positive impact to the local economy & sales tax base
  • An increase in land values

Now, let’s dig into the benefits for the homeowner.

Benefits of Residential Tax Abatement 

Save Money

The money saved via property tax reductions is significant making it the biggest benefit for homeowners. This is done by lowering development costs for homeownership resulting in either cost savings or more square footage with higher-end finishes in your original budget. Here at Redknot Homes, we can help to maximize this incentive with our building processes.

Improves Resale Value

A current tax abatement can increase the resale value since the abatement transfers with the sale of your home. 

Increases your Return on Investment

Abatement eligible neighborhoods consistently experience tremendous growth at much larger and quicker rates, making your property more valuable in the process.

Energy Cost Savings

LEED certified means “Leadership in Energy & Environmental Design” which benefits the homeowner in energy cost savings from building efficiencies.

Community Revitalization

Attracting and retaining city residents in turn stimulates community revitalization causing a ripple effect of benefits for the homeowner and the city, including:

  • Beautification. The place where you call ‘home’ is better cared for and has an improved appearance.
  • Increased economic growth! A city where people reside is a city of booming local businesses that they depend on. 

Tax Abatement on LEED Certified Homes

Longer tax abatement periods and higher maximum abatements may be achieved for properties that meet Leadership in Energy and Environmental Design (LEED) standards. Since LEED homes benefit both homebuyers and the environment, Redknot has focused on creating homes with these guidelines in mind. Take a look at the chart below for a better understanding of how LEED certifications can affect tax abatements in Cincinnati. The chart below is for projects started before January 1st, 2022. The City Council of Cincinnati has since passed new abatement limits and conditions. For the new policy info, please click here.

 

   

Visitable 

Non-Visitable 

Visitable 

Non-Visitable 

Non LEED Certified 

Max Abatement 

___________


Term (years)


$275,000



10


$275,000



10


$275,000



12


$275,000



10

LEED Certified 

Max Abatement 

___________


Term (years)


$275,000



10


$275,000



10


$275,000



15


$275,000



15

LEED Silver

Max Abatement 

___________


Term (years)


$400,000



10


$400,000



10


$400,000



15


$400,000



15

LEED Gold LBC Net Zero 

Max Abatement 

___________


Term (years)


$562,000



10


$562,000



10


$562,000



15


$562,000



15

LEED Platinum LBC Petal 

Max Abatement 

___________


Term (years)


No Limit



10


No Limit



10


No Limit



10


No Limit



10

 

Tax Abatement Savings Example

How much money can you save with a tax abatement in Cincinnati?  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/.

Tax Abatement Calculator

Use our tax abatement calculator to find out what you could save in property taxes by building a LEED certified home in the city of Cincinnati. This calculator assumes a 2.58% tax rate, a 4% interest rate, and a 30-year loan. 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. Adjust the LEED Tax Abatement to the level you wish to certify at: Silver, Gold, or Platinum. 

Tax Abatement Calculator

For assistance with the calculator or a building project, please Contact Us.

Expert City Home Builders at Redknot

Redknot is an expert at following these very detailed processes to ensure the LEED certified requirements are met to capture this incentive!  In fact, Redknot has never missed a LEED certification target meaning that every new homeowner has enjoyed the full tax abatement that they desired. 

Not only are we experts at crafting the strongest LEED certified building processes for your home, we also have a large selection of lot options to consider that are in tax abatement eligible neighborhoods. City building is our niche, we know the ropes and handle all of the complex details below of building an eco-friendly, tax abated home for you and take pride in being the best at it! 

  • LEED certification - Silver, Gold, Platinum
  • Abatement process with the city
  • Mandatory inspections to qualify
  • Filling out all of the tax abatement paperwork with the city

You can focus on building the unique custom home of your dreams in our beautiful city, while also deciding how you’ll spend all that extra money you’ll be saving on property taxes!

If you are looking for a new home with potential tax abatement benefits, then contact us today to start your search.