Legislation, Random Thoughts, Real Estate Taxes

Indiana Governor Lobbies Realtors for Tax Cap Amendment

October 13, 2010 by · 2 Comments 

Governor in MerrillvilleIndiana Governor Mitch Daniels came to Merrillville Indiana last week seeking support of Question 1 on the November ballot. The referendum would make the current Indiana state law regarding real estate property tax caps part of Indiana’s State Constitution and consequently almost impossible to repeal in the future.

In 2002 the State of Indiana was forced by court order to reform it’s real estate property tax structure to a “value based” system.  Under this new method the market value of a home now determines how much tax liability you pay into the county, townships and local municipal governments.

As with any change that major, it did not go smoothly and equitably at first for homeowners throughout Northwest Indiana. One complication occurred during the real estate price run-up in 2004 and 2005. As values of homes jumped up “on paper” long term homeowners found their real estate property taxes going into the stratosphere. Seniors and people on fixed incomes in Lake County Indiana and Porter County Indiana found even paid-off homes almost unaffordable due to these bloated valuations making their real estate property taxes triple and quadruple.

So the concept of capping real etate property taxes was born. In order to smooth out whipsaw swings and establish a maximum percentage the real estate property caps became Indiana State law.  Under the current law the formula’s maximum rates works like this:

  • 1% Residential owner-occupied homes, primary residences
  • 2% Residential property other than owner occupied (apartments, rentals, etc)
  • 2% Agricultural land
  • 3% Other real property (such as 2nd garages, pole barns, etc)
  • 3% Personal property

Tax rates can still fluctuate up and down since the rate is a function of both the tax levy (how much governments need in revenue) and the assessed value of all the properties in those local jurisdictions. But capping the values is universally accepted as a method of holding local officials accountable to taxpayers because they can no longer live beyond their means.

Indiana Governor Daniels called the drive an “authenticate citizens movement” which lowered local taxes by 36 percent statewide.  While the proposal appears popular with Northwest Indiana voters, Daniels wants to make sure that the current law is codified into the Indiana State Constitution. He explained to the Greater Northwest Indiana Association of Realtors that homeowners “will always be vulnerable” until the caps are solidified, and went on to say “without caps there is no pressure to do what needs to be done.

The governor also took the opportunity to compare this initiative to other items on his agenda. Claiming the State was virtually bankrupt when he assumed office, he stressed his successes in fiscal management and took credit for Indiana’s current solvency; the State’s  great business climate compared to neighboring states;  that Indiana’s property taxes are “8th lowest and going down“.  Acknowledging the necessity for “squeezing and innovation” Daniels joked to the Realtors present the real secret to his success was “we spent less money than we took in.”

Whether you are one to get involved with politics or not, this November will impact you if you currently own a home or plan on buying a home. Let your voice be heard this November and vote YES on Question 1.

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Steve Cardwell

Steve Cardwell is an Indiana Realtor working with residential buyers and sellers throughout Northwest Indiana. He likes to stay current on the housing market by analyzing real estate trends with a focus on the towns of Highland and Munster Indiana. His broker affiliation is Red Key Realty Leaders in St John, Indiana. Learn more about Steve and visit www.SteveCardwell.com.

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2 Responses to “Indiana Governor Lobbies Realtors for Tax Cap Amendment”
  1. Great job on explaining not only the question, but also the answer to Question 1. Now we need to make sure that voters do support property tax caps as that would be one less thing that could derail the real estate industry moving forward. Vote YES On Question 1.

  2. Many of us who were in “the biz” back then will recall the turmoil and despair when people were forced to sell homes that had been held by families for several generations, simply because their homes were too expensive to keep. I think this is a bipartisan movement, something you can get behind no matter which side of the political aisle you support.
    And yes, this will help stabilize the uncertainty people feel about fluctuating taxes, knowing what the limits are. I encourage everyone to spread the word. Vote YES on Question 1.

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