Home Buying in Indianapolis>Question Details

Jena, Home Buyer in Indianapolis, IN

I'm lost as to what your exemptions are regarding Property taxes. When we buy, what exemptions would we want in place (from previous owners)?

Asked by Jena, Indianapolis, IN Tue Jul 23, 2013

What does the Homestead and Mortgage exemptions do for property taxes? What if they are not in place from the previous owners, when we buy?
How much do they take off the property tax owed? I also assume you have spring and fall taxes?

Help the community by answering this question:



I always ask the title company about the Homestead and Mortgage exemptions for my clients. Some title companies will include them in the closing and get the signatures and file the forms for you, others will not but may provide you with the forms and information to do it yourself. However it is done, by you or by the title company, it is important to make sure you get credit for the exemptions you are entitled to.

Since the other 2 agents discussed the way taxes are handled in Indiana, I won't go into that any more, but I will say that since you are aware of the exemptions you should apply for to make sure you ask your agent to see if it will be handled at closing. It's an easy thing to find out for the agent, and I personally like to make sure my clients get all the exemptions they are entitled to so they aren't paying more on taxes than they need to.

Indiana voted a few years ago to cap the property taxes at no more than 1% over the fair market/assessed value. Some municipalities have found it difficult to stay within those caps and have had referendum votes, usually to fund school projects. Most communities have been able to stay within the property tax caps that are mandated now by the state.

I'd be more than happy to explain the details of property taxes, or any other things you may have questions about in regard to Indiana or purchasing a home. Just let me know what I can do for you and I will endeavor to meet your needs.

Julie A. Barnett
Broker Associate/REALTOR
Prudential Indiana Realty Group
(317) 847-0055 (cell)
0 votes Thank Flag Link Tue Jul 23, 2013
The previous agent explained it accurately. It is important that the Homestead and Mortgage Exemptions are in place when you purchase because your lender will calculate your total payment based on available information - and with no exemptions, the property tax will be about 2% of the assessed value instead of the 1% limit that exists with both exemptions. That difference could be enough to cause you to be denied financing. For example, a $100,000 house will have a tax bill of approx. $1000 per year, or $83 per month. With no exemptions, the tax will be $167/month.

Call me for help in finding a home. Peter Knight, (317) 529-4178, peterknight@frontier.com
0 votes Thank Flag Link Tue Jul 23, 2013
this would be easier to explain via phone. Give me a call 317-218-7867.

Briefly...houses are assessed by the county and a mil is applied for property taxes. Homestead ($45,000) and mortgage ($3000) exemptions are filed to reduce the amount of property taxes you pay by reducing the taxable amount. The when the homestead is filed, taxes are further reduced to 1% per year. Without the exemptions, you taxes are normally double. You can only have one homestead exemption.
Taxes in Indiana are done in arrears. You pay this year for last years taxes. At closing, your seller will pay you for roughly one year of taxes. You will be assuming their taxes so they are prepaying you for that expense. If the exemptions are not filed, they will pay you at the higher rate.
When you own the property, you'll need to make sure both exemptions are filed by the year end. If not, they may "fall off" from your previous owner and your taxes will go up substantially. (I've seen this happen! Ouch).
We do pay for taxes in May and November. It is due by the 10th and there is a penalty for late payment. Most of the time, it's not a big deal because your mortgage company pays for these from your reserves.
Whew! That's the short answer. Again, give me a call. We can discuss more.

Robert Haynes
Principal Broker
Robert Haynes and Associates
0 votes Thank Flag Link Tue Jul 23, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer