on Feb 16th, 2011Indiana Property Tax Facts
If you’re thinking of buying a Hamilton County home, it’s important to know your Indiana property tax facts. Although Indiana has some of the most reasonable property taxes in the country, those taxes can still potentially tack on several hundred dollars each month to your mortgage payment.
First, you should know what Indiana property taxes are: an annual local government tax on real estate. Indiana property taxes are based on the value of the property, to include the land the property is on.
Second, you should know why you’re required to pay Indiana property taxes: to generate revenue for your local Indiana community. Indiana property taxes are administered at the local level with oversight by the Indiana Department of Local Government Finance. More than 90% of the revenue generated by property taxes remains in the community in which they are collected. Schools, city/town budgets and county budgets receive the majority of tax revenue.
Indiana Property Tax Facts
- Indiana property taxes are paid in arrears, meaning the taxes you pay in the current year represent the taxes owed for the previous year. For instance, Indiana property taxes are paid in May for the first six months of the previous year and in November for the last six months of the previous year.
- Property taxes are based on the assessed value of a property. A property’s assessed value is determined annually through an evaluation of the market value of the property.
- Indiana property taxes for owner-occupied homes cannot exceed more than 1% of the assessed value of the property, up to one acre. Acreage above one acre is taxed at 3% of the assessed value. Outbuildings, pools and sheds also are taxed at 3% of assessed value. It is possible for property taxes to fall below the 1% assessed value cap depending on the allowable tax deductions a buyer qualifies for (homestead deduction, mortgage deduction, disabled veterans deduction) and supplementary tax deductions which may be applied by the state.
- Owner-occupied homes assessed at more than $645,000 will pay 1% of the assessed value in excess of $600,000.
- Investment homes are capped at 2% of assessed value and commercial properties at 3%.
- If you are purchasing a home to be used as a primary property and exemptions have already been filed by the seller, you, the buyer, must file for the homestead, mortgage and any other deductions no later than Dec. 31 of the year in which the home is purchased. Failure to file for the exemptions in the year of purchase will result in taxes going up in the following year.
Your Indiana county auditor can provide the most accurate information on individual property taxes. Click here for a listing of county auditor contact information.
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I love the article. As a upcoming homebuyer, I have learned about the Indiana Property Tax 1% cap recently and realized there are some exceptions. The tax cap is at state level but there can be amendments such as from the township schools that raises that tax rate over 1%. Is this the case for Hamilton County? This is the area I’m looking at currently for my new home. I have found copies of the tax statements for potential properties through their government web site. It looks to me that the effective tax rate seems much higher (1.8% – 2.25%). I’m not sure if the credits that are available (such as the homestead, mortgage, etc) have any play in this either.
Thanks again for the article!
I thought that was very informative. Thanks for the great information. I’ll keep an eye on this.