Indiana Property Tax

Indiana's real property tax assessment rules were changed by the State Supreme Court in December, 1998.  New rules, being drafted in 2002, differ a lot from the old, unconstitutional rules.  Assessment of real property structures is currently based on the estimated cost required to replace the structure, less depreciation based on age, with modifications for condition and quality.  Under the new rules, improvement assessed values will be the predicted selling prices of the properties, also known as "market value." 

Assessment of residential, commercial and industrial land also is based on estimates of sales prices.  Assessment of farm land is based on a statewide fixed price per acre, called the base rate, modified by the land's productive capacity, forest cover, grade, and other factors.  Real property was reassessed for taxes payable in 1996, and is now (in 2002) being reassessed for taxes payable in 2003. Assessment of personal property is done annually by property owners or local assessors, based on equipment and inventory purchase prices. Equipment assessments allow for depreciation.  

Homestead Tax Credit Rate
The homestead credit is a percentage to be subtracted from a homeowner's tax bill after the gross amount owed is calculated.  The statewide homestead credit rate is currently 10%.  In a few counties (like Tippecanoe), the rate can be as high as 18%.  The tax owed on a property is the product of its assessed value and the total tax rate.  For houses that are the primary residence of a homeowner, this amount is reduced by the 10% homestead credit.  This would cost local governments revenue, except that the state pays local governments for lost credit revenue out of the state budget.

Some counties with the County Option Income Tax (COIT) have pledged income tax revenue to homeowner tax relief.  COIT counties can raise the local credit from 10% to a rate as high as 18%, but they must use COIT revenue to replace the lost property tax revenue, before the COIT revenue is distributed to local governments in the county.  Tippecanoe County does this, and that's why the homestead credit is listed on the bill at 18%.