Get Real – Property Tax Reform in Indiana
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Is the Indiana property tax system broken?
Ask anyone who saw their property taxes spike! You will hear a very loud and clear YES!
Property taxes are used to fund local government and its services – schools, fire protection, police, roads, libraries, etc. These taxes are based on two main factors: 1) the assessed value of a home and 2) the tax rate.
But why the huge rise in property taxes? Several events came together to create the “perfect storm” in the property tax arena.
- Trending – basing property taxes on market value of home
Taxes paid in 2006 were based on market values of homes sold in 1999. Taxes paid in 2007 were based on market values of homes sold in 2004-2005. That means all that appreciation in market value caught up to us in the form of our 2007 tax bill! - Elimination of taxes on business inventory
Loss of these funds had to be made-up somewhere – property taxes! - Increased local government spending
As you know the cost of everything is going up for us as individuals and families. Our local government costs keep going up, too. - Assessment errors/inconsistencies
With over 1000 townships (which are the taxing districts in Indiana) there are bound to be inconsistencies. Likewise, we have over 1000 (often untrained) assessors determining market value! - Changes in the economy
Our economy has gone from red hot in the late 90’s to warm to ice cold this past fall!
Are there solutions? We certainly hope so! Voters spoke at the polls last fall and it seems the legislature is going to do something!
One step to solving the tax problems that is being discussed is to consolidate taxing units. Rather than township based assessments and taxes, many are promoting county based taxing units. This could help equalize the tax burden.
As a home owner and a REALTOR, I definitely would like to see this option considered. If not actually switching to county based taxing, at least some equalization.
Let me give you an example of why I would like to see this happen. There are two homes of similar size and age. One is a Gunstra home in Monroe Township with a tax value of $159,800. The other is a Beazer home in Taylor-Kokomo with a tax value of $161,500. Not much difference there!
BUT (and this is a big BUT), the tax bills are significantly different! The taxes on the house in Monroe Township, without exemptions are $3,327. The taxes on the house in Taylor-Kokomo are $4,789! Taxes on the Taylor-Kokomo house are $1,462 higher than a similar home in Monroe Township!
The differences aren’t always that huge. I used homes in the lowest and highest taxing townships as an example, but you can see how where you live within Howard County definitely has an impact on your taxes – and often for very similar services.
The Indiana Association of REALTORS (IAR) is supporting this and several other reforms which you can see below: (Click for a larger view.)
The IAR has produced both a video and a radio spot about the problem with our township assessment system. While you are on the site Get Real Indiana, be sure to check some of the resources you find there.
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