Good news for homeowners

This was published in last Sunday's Indianapolis Star and was written by Jim Litten the president of F.C. Tucker. I think it is good information about where property taxes are going not only for Washington Twp-Marion County but for the whole state. Now the only question will be how is a property assessed. From my understanding that will be something we can vote on in the November election.

Good news for homeowners and real-estate market

By H. James Litten

Thousands of Indiana homeowners should be breathing a sigh of relief, thanks to the bipartisan efforts of the Indiana General Assembly to ease the tax burden of great concern to Hoosiers since last summer. After months of discussions, legislators agreed to approve a sweeping tax reform package, signed by Gov. Mitch Daniels on March 19, that caps property tax bills for homeowners at 1 percent of assessed value. Rental properties will be capped at 2 percent.

This tax package not only brings great news to homeowners, but I believe it will bring a much-needed lift to Indiana's real estate market, particularly in Central Indiana.

Indiana is fortunate to have one of the highest home ownership rates in the nation, but last summer's tax bills had the potential to dramatically reduce the number of Hoosiers who could afford their own homes. Property tax bills were scheduled to go up an average of 24 percent statewide, but some areas of the state were seeing tax increases of two times or more. When coupled with Indiana's rising foreclosures and continued lending to those with questionable credit, the property tax increases slowed an already-weakened housing market. Many home buyers and home sellers simply put a stop to any decisions about moving.

To be fair, Central Indiana's real estate market still experienced almost 28,000 residential real estate transactions in 2007, the fifth-best record in our area's history. But the fear of larger property tax bills caused many Hoosiers to temper their home buying and selling while waiting for the tax issue to be resolved.

The action taken by Indiana's legislators resolves the property tax issue, hopefully once and for all. Now homeowners and prospective homeowners can accurately predict their semi-annual property tax. This certainty, combined with the pent-up demand we are seeing in the local housing sector, is a recipe for increased sales in 2008 in Indiana. In Central Indiana we are already experiencing some market stabilization with local home sales up 0.9 percent in February compared to the same month last year. It's the first time residential real estate sales have been up, compared to last year, since April 2007.

The tax package also stabilizes Indiana's housing market by helping senior homeowners on fixed incomes. Property taxes cannot be raised more than 2 percent per year for those older than 65 with incomes less than $30,000 (joint incomes less than $40,000). That means more Hoosier seniors will be able live out their lives in their own homes.

Revisiting Property Taxes for the last time

I wanted to revisit the property tax comments I made in a couple of posts a while back. This will be the last time I bring up property taxes at least for this year.

As you may remember from my previous post, property taxes are something is ever changing in the real estate market. This morning I finally found a nice document that explains most items or questions surrounding property taxes in Marion County. I feel like it is easy to read and easy to understand.

Click here to read the document.
property%20tax%20document.pdf

Here are some of the highlights from the article

1) How are property tax bills determined?- page 4

2) How is the tax rate determined?- page 4

3) What does "2007 pay 2008" mean?- page 4

4) Property tax deductions for Indiana Homeowners- page 5- THIS IS IMPORTANT- if you have purchased a new home or refinanced your current mortgage you must file for your deductions. Contact us if you would like for us to make sure your correct deductions are filed.

5) You can appeal your property tax bill- page 6- If you decide to appeal and need assistance on obtaining a current market value of your home, we can help you with that documentation for that value.

So that's it, no more property tax talk for 2007.

How to figure your property tax

This is a question that I am asked pretty frequently by people that are purchasing homes. Most of the time it is people that are relocating (I guess the people that live in Indiana already realize that the answer will be blurry) from another part of the country.

Today my goal was to find out that answer specifically so I could post it here. Well look at the time of this post- the work day is over or at least coming to an end- and I still do not have an accurate answer or specific formula.

It was funny the first time I was asked this question I did not have a good answer I felt quite intimidated or not educated on a topic that I felt like I should be educated on. I answered the question of "how are the property taxes figured on this home" with I am not sure but I will get back to you with a good answer. Now, I do not think that is a bad answer and many times due to most real estate transactions being somewhat different from the next I do give that answer and then go find (research, ask my mom, ask a manager, ask my dad) and then get back to the person but on this day, on this topic I came back to that person with really no good answer and that has continued through to today.

On that day, I called my dad (my dad is an appraiser and we talk a lot- another good blog topic) and I asked him the property tax question. The reason why I asked my dad is that is VERY analytical (Type A) and I assumed he would email me some spreadsheet with how to figure property taxes in different parts of Greater Indianapolis and that would be that. I would take that email and forward it on to this client and then come up with some good document to forward on to other clients. Nope! He said that property taxes are figured on assessed value of the property and then multiplied by some figure for that area. This is not the clear cut answer I was looking for. How is that property assessed? When is reassessed? What is that figure that it is multiplied by? How is that figure determined? These were all unanswered questions.

So for today I am no closer to getting a PERFECT formula for property taxes in this area but I will look again tomorrow and let you know what I find.

Current Property Tax News

Thursday, Nov. 20 was Organization Day at the Indiana State House. Organization Day is usually a mostly ceremonially day that officially starts the legislative session with the real business not starting until the first week in January. But the on-going property tax crisis and recent election results set a new tone with the legislature getting a head start on it’s work.

Several bills addressing various property tax matters were introduced and hearings will begin in December instead of January.

To date, there have been three major proposals unveiled to address property taxes.

1)Governor Daniels was first to present a plan that would reduce most homeowners’ bills by about a third. The Governor’s plan calls for the state to take over child welfare and school operating expenses and paying for those with a 1% increase in the sales tax. The plan calls for assessment reform by eliminating township assessors and proposes capping property taxes at 1% for homeowners, 2% for rental property, and 3% for business through a constitutional amendment.

2)A second plan was presented by the State Tax and Financing Policy Commission led by Senator Luke Kenley. The Commission’s plan contains various proposals, many of which are similar to the Governor’s plan, and are expected to reduce homeowners’ property tax bills by nearly 50%.

3)A third plan was recently presented by Representative David Orentlicher that proposes raising both the sales tax and income tax by 1%. Representative Orentlicher’s plan is estimated to reduce property tax bill by 62%.

With three different proposals, and more expected, there is much room for debate and compromise. While there is great hope for bringing meaningful reform, there are also many concerns. Some of these concerns have been avoided so far such as imposing a transfer tax on all real estate transactions as a replacement revenue source. But several concerns still remain, such as the different caps for rental property and a potential new tax on services.

The first public hearing on the Governor’s proposal, HB1001, is scheduled with the House Ways and Means Committee in the House Chambers of the State House at 10 a.m. on Dec. 3.

Property Taxes

This topic is huge! It seems there is always discussion around property taxes in the business that I am in. For good reason since I help people buy and sell homes and part of that home selling or buying thing is the taxes that are paid on that property.

This is my opinion as a professional in the real estate market.

1) DO NOT ever buy or sell a home or decide on a specific area due to the taxes on that property or area. Until Indiana has a better way to assess and re-assess taxes, property taxes on a specific home or area can increase or decrease pretty randomly.

2) When you buy a home you are given property tax dollars at closing from the seller. Many times this amount is a nice chunk of change. Take this money immediately after closing and put it towards the principle of the mortgage or deposit it into your escrow account. DO NOT spend it!

More on both of my opinions later this week.....Stay tuned.