So how do property taxes work in Indiana? I'm sure you've been dying to know so I am bringing it to you in 60 seconds or less!
1) The main question I get about taxes is, how does it work when buying or selling a house?
Because we live in Indiana, we like to do things backwards. When you go to buy a home, typically the seller will credit you for the future tax bill. This is great when you're buying, but when you're selling you will be the one giving the credit. At the end of the day, it all balances out for all involved.
When you are the buyer, this credit will help offset some closing costs which can be beneficial. When selling, just be prepared to pay about 1 years worth of taxes at the closing. Keep in mind that if you have a mortgage on the home, your lender has been setting money back in an escrow account to pay these taxes, so you will get most of this money back after the mortgage has been paid in full (typically about 30 days after closing).
We pay our taxes in arrears
When buying a home, you typically receive a credit at closing for the future tax bill.
When selling a home, you typically are the one giving the buyer the credit for the future tax bill.
2) How do they figure out how much you owe for property taxes?
You would think if you lived in a specific neighborhood, you and your neighbor would pay the same amount of property taxes. Unfortunately that is not the case. It is based on the assessed value.
If you are a homeowner and you reside in your home and claim the homestead exemption, you are typically taxes at 1% of the assessed value. So if your home is worth 100k, then you would pay about $1,000 / year in property taxes.
For investors, or a non owner occupant, they typically pay 2% of the assessed value. This is because they aren't living here in the neighborhood or contributing to the community other than than having a property here. A lot of investors don't know this, so be sure to double the taxes when you run your numbers before purchasing!
Lastly, if you own commercial property, you will be taxed at about 3% of the assessed value.
1% for owner occupied residents
2% for non owner occupied residents
3% for commercial
I knew learning about property taxes would be so much fun! Once you close on a home and you claim your homestead, you really don't have to do much with this. Your lender typically pays your taxes for you. You will want to just keep an eye on the amount you're being taxed each year. If you have concerns, you can always appeal it.
What questions do you have about this process, feel free to shoot me a message @ Paul@SoldByPaulLinn.com or 317-629-0070