Paula Henry

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Indianapolis Property Taxes - A Homebuyer’s Story

September 10th, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers, Indy Home Sellers

  

 A Phone Call

A recent phone call from a gentleman about the amount of real estate property tax he had to pay for the reconciliation bill in July made me think about what a mess this whole year has been for homeowners, both those who are buying and those who are selling.

This particular person closed on his home in July 2007, a really bad month to close on a home in Indianapolis. Let me explain – Last July was the month the property taxes were stayed by the Governor. When tax bills were received last year, (late, I might add) there was an uproar from homeowners in Indianapolis. 

The tax paying citizens of Indianapolis marched at the Governor’s home over the July 4th Holiday last year and back then, I thought, what irony. It was Independence Day and we definately needed some independence from property taxes and their effect on our freedom to live in our homes without fear property taxes would be the final straw to break the proverbial camels back.

A Recap

The property tax bill received in July 2007 was for taxes due for the first half of 2006. The people thought their voice was heard when the Governor placed a stay on taxes at 2005 rates, so all propety could be reassessed. It was a temporary reprieve, backed by a promise of a rebate.

So, everyone paid the bill at the new temporary rate. They again paid the “new, temporary” rate in November of 2007. Okay – now we got through that year, except - whoops – the new assessments are in and now the “REAL” bill will go out for the difference. This bill was the reconciliation bill (C-bill) everyone receievd in June of this year. Now, remember, this is a reconciliation of taxes for 2006, payable in 2007; actually paid in 2008.

I’m really sorry if I have lost you by now. It’s almost unbelievale, except for this homebuyers story

A Homebuyer’s Story

The gentleman who called me bought his home in July, 2007 about the time the original 2006 tax bills were sent out. For his home, the taxes were around $7000. semi-annually and he would have received a full year plus almost a month of tax credit……oh, about, a little over $14,000………..but taxes were stayed and instead he received a credit based on the previous years taxes (2005) of about $4000. semi-annually. Guess what happened to the other $6000.00? Yes, that is SIX THOUSAND DOLLARS. He received a nice little bill from the county for that amount, commonly known as the C-Bill.

Now, here’s the problem – he DID NOT live in the home in 2006. Here it is 2008, and he is paying $6000.00 in taxes for a home he did not occupy at the time the taxes were accrued.

When the Governor made this nice little concession for all the great taxpayers of Indianapolis, there were no guidelines to go by for determining what tax the buyer would face in the future – no, we didn’t receive those reassessments until June 2008. All we could do was go by the current certified taxes, which were wrong! Or guess at an amount which could be negotiated for future taxes. Let’s see, how does one negotiate an unknown amount, especially when we don’t know if the new amount will be different?

What’s Next

Remember, it’s not over yet – oh yeah, we now have assessments and real dollar amounts, but we still don’t have May 2008 bill, which may come out in November,(I’m guessing after the election) then we will have to wait for the November tax bill, then we will have the May tax bill again, hopefully in May 2009. That will be three tax bills payable in a six month period.

Talk about confusing – if you have your taxes escrowed and they are paid by your lender, please read this story.

I’d love to hear your stories about how the property tax situation has affected you.

Here’s a few helpful sites about real estate property taxes:

Marion County Tax Estimator

Citizens Guide to Property Taxes

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This entry was posted on Wednesday, September 10th, 2008 at 6:05 am and is filed under Indianapolis Real Estate News, Indy Home Buyers, Indy Home Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  1. joe peffer said at September 11th, 2008 at 11:13 am

    Wow Paula, this sounds unbelievably complicated and confusing for Indy home owners.
    Columbus home owners always have a bit of a hard time understanding that real estate taxes are paid in arrears and that the Seller credits the Buyer at closing, but throw in the scenario you describe and, well, yuck.
    Indianapolis home owners are lucky they have a Realtor like you looking out for them.

  2. Paula said at September 12th, 2008 at 10:55 pm

    Joe - Yeah, it doesn’t get much more complicated than what we have going on here in Indy. Hopefully, by next May, we’ll be back to taxes as usual!

  3. Emily in Austin said at September 14th, 2008 at 3:23 pm

    Oh goodness, that does sound incredibly convoluted….hard even for real estate experts to understand, let alone consumers trying to go it alone. In Austin, there was a tax break on houses last year, but then the value of homes changed, sometimes upwards — so for several people I know, that tax benefit was very brief and now they owe the same they did before, if not just a little bit less.

  4. Paula said at September 15th, 2008 at 3:36 pm

    Emily - That sounds like what we went through. Homeowners really gained nothing from the stay on taxes; the assessments came back much the same. You know the saying, pay now or pay later. Later is now!

  5. don drew said at September 17th, 2008 at 8:33 am

    the tax man cometh and the tax man goeth..but the politico’s know that the tax man is their best friend and there will always be one in their administration…it’ll never change…

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