Taxes

Let's talk about property taxes! In Indiana property taxes are a little different than in every other state except Arizona. First of all, property owners are taxed in arrears, which means that the taxes you owe for 2005 were actually incurred in 2004! It is for that reason that sellers generally provide buyers with a pro-ration tax credit at closing to cover the taxes for which they are responsible, but have not yet paid. This is typically equal to approximately one year's worth of taxes depending on when during the year you close.

Another important aspect about Indiana taxes is that just two years ago we experienced a tax reassessment. This reassessment reallocated how different sectors of our economy pays their share of taxes. For example, corporations ended up with less of a tax burden and homeowners ended up with more of a tax burden.

Older homes, which historically enjoyed lower taxes started seeing up to 300% increases in their annual property tax bill! This created a shift in valuation in these older neighborhoods and much lower appreciation. Some such neighborhoods in Indianapolis, which experienced these significantly higher taxes include: Broad Ripple, Butler-Tarkington, & Meridian-Kessler. As a result, sales prices have not risen as much as in the past and we are seeing many more houses on the market as homeowners are not able to afford the higher taxes and choose to put their houses up for sale causing a glut in the market and a further devaluation of home prices.

For more information about taxes and real estate in Indianapolis, drop me an e-mail at Steve@Welcome2Indy.com.