Hoeppner Wagner & Evans LLP

Taxpayer: Is Your Property Receiving The Proper Tax Cap Application As Set Forth In The Indiana Constitution As Amended In 2012?


In 2012 the Indiana Constitution was amended through a taxpayer referendum to establish a maximum percentage amount that property could be taxed. This referendum is commonly referred to as the tax cap provision and is set forth in Article X, Section 1 of the Indiana Constitution. Those percentages are as follows:

  1. Principal Place of Residence 1%
  2. Other residential property 2%
  3. Agricultural land 2%
  4. Other real property 3%
  5. Personal Property 3%

(Personal Property that is associated with 1 or 2 above is capped at 1 or 2%)

Beginning with the assessments in 2013, the Department of Local Government Finance ("DLGF") began changing the classification of some property to be classified as other real property. This became very apparent to those individuals whose principal place of residence consisted of multiple parcels. DLGF stated that the parcel with the home on it would qualify for the Principal Place of Residence tax cap of 1%, and the remaining parcels, even though they are part of the taxpayer's yard, would be subject to the other real property tax cap of 3%.

In a petition to correct errors that I filed for Michelle Cubit, the Indiana Board of Tax Review decided this month that this approach is inconsistent with the Indiana Constitution. If a Taxpayer's Principal Place of Residence consists of multiple parcels, all of the parcels qualify for the 1% tax cap set forth in the Indiana Constitution.

Every taxpayer should review their respective tax bills to ascertain the application of the tax caps to their property. If the property is the taxpayer's principal place of residence the assessed value of the property should be listed on line 1a of the tax bill, which is the 1% tax cap. For all other residential property owned by the taxpayer, the taxes should be capped at 2% and reflected on line 1b of the tax bill.

If a taxpayer should notice line 1c of their tax bill has an assessed value listed, and the property is residential property, the taxpayer needs to question the application of the 3% tax cap to their property. Any application of a 3% tax cap to residential property would be inconsistent with the Indiana Constitution.

If you have questions regarding the contents of this article, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.

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