I know a lot of times people get confused about our wonky property tax system, especially since we are a state where we are one year in arrears. Most people understand that there are now caps on the taxes. 1 percent for owner-occupied homes. 2 percent for rental properties. 3 percent for businesses….but why do we see times where the tax bills go over that cap???
For owner occupied properties, you might have looked to confirm that the homestead and mortgage exemptions are in place, which is always the first step you want to take…but why would the tax amount be OVER the 1 percent cap??
Well, one reason is that the 1 percent cap only applies to the house itself, not any detached items. So if they have a detached garage, pool, pool house, gazebo, or even a storage barn….those things get taxed at 3 percent!!! Not a lot of people realize that, but it is true for ALL counties in Indiana….and a court case is currently in appeals about that.
Another reason that is pretty common these days is where the voters have approved a temporary tax referendum for the school district. IPS is asking for one right now for Marion County. That usually only lasts for 8 years before they have to go before the voters again for a vote on a renewal or a new referendum.
If you have a double (where you own both sides), and live on one side, only that side gets 1 percent, and the other side is taxed at 2 percent.
If you are on a big parcel, the 1 percent only applies to the house and 1 acre…any additional acreage is assessed at an ‘Excess Acreage’ rate. Now you can get that rate lowered if you can show that the land is actually used for agricultural purposes…but that usually means it needs to have crops growing on it, or it needs to have a couple cows grazing. Yes, that’s right, go buy a couple cows…or sheep, or goats…but a few chickens for your own personal egg usage do not count, I learned. 🙂
By pulling the property tax card on the county assessor’s site, you can see what is being categorized for various tax purposes. However, the actual tax rate only appears on the Treasurer’s tax bill.
So how are these assessments done? I used to be that we got a reassessment every 7-10 years. When Indiana changed to a Fair Market Value system, all properties have to be physically reassessed every 4 years.
Most counties comply with that rule by doing 1/4 of their properties each year, so that they will have completed all properties within a 4-year period. And then each year for the other 3/4 that didn’t get a physical assessment, they pull trending statistics from their local MLS, ( so MIBOR in our case) to adjust the assessed amounts.
So if you see a bigger jump in the assessment in one year, it’s likely because they just got physically assessed.
Assessors are looking at work permits that were filed with the county to see if people have finished a basement or attic, done an addition to the house, etc. And they even use GPS tools and other resources to see if exterior changes have been made, like adding a pool or deck/patio space.
There are ways to file an appeal, if you feel that the tax amount is too high. Obviously an appraisal will show the value, but a person can file an appeal online with comps that their Realtor has given them….but here’s the catch…the rule was just changed where a person only has 45 days from the day the tax bill is sent out to file the appeal!!! There is NO wiggle room on that, I am told.
Finally, if a person wants to hire someone to help them with an appeal, there are companies out there who will do it, and will do it for a contingency fee on the amount of savings that they are able to get for the client…so no up-front fee and nothing if the appeal is not successful.