If you’re a homeowner, property tax deductions can help reduce the amount of taxes you pay on your home. Two of the deductions you may qualify for include the homestead exemption and the mortgage exemption. To receive these deductions, your applications must be completed and dated by December 31 each year.

Homestead Deduction

All states offer homestead exemptions, including Indiana. To qualify for this exemption, the property (and up to one acre of land) you are claiming must be your primary residence – meaning you must live in the home. You must own the home or be buying it on a recorded contract. Qualified dwellings include houses, condominiums, manufactured houses, mobile homes and farms.

You can’t receive the homestead deduction on multiple properties or in multiple states. This deduction only applies to your “principle place of residence.” The total amount of the deduction, which you can receive, is either 60% of the assessed value of the home or a maximum of $45,000.

You don’t need to reapply for this deduction each year. You would only need to reapply if the property is sold or the title is changed. Then the sales disclosure form must be signed and dated by the all parties by December 31, 2012. However, if the seller had already filed the homestead exemption by March 1, 2012, then the seller’s exemption automatically carries forward for the 2013 tax year – depending upon if the new homeowner qualifies for the homestead exemption.

To claim this deduction, you must file the homestead verification form that was mailed with your tax bill by December 31, 2012. Forms can also be found online and at the local tax assessor’s offices. You (and a spouse, if you’re married) must provide the last five digits of your social security number(s) and driver’s license number(s).

Note: If you don’t complete this form, you may lose your homestead deduction starting in 2013.

Mortgage Deduction

If you own property (or a manufactured or mobile home) or are buying property on a mortgage recorded at your Indiana county recorder’s office, you may qualify for the Indiana mortgage exemption. Note: You must owe a balance on this mortgage debt.

To qualify, if you are a new homeowner, you must have had a mortgage as of March 1, 2012. If you closed on a new home prior to March 2, 2012, then you must file for your mortgage exemption by December 31, 2012. However, if you bought a new home on or after March 2, 2012 through February 28, 2013, you have until December 31, 2013 to file for your mortgage exemption.

The following applies in resale situations:

• If the seller or borrower had a mortgage exemption as of March 1, 2012, then the deduction carries forward to the 2013 tax year.
• If the seller or borrower didn’t have a mortgage exemption on record as of March 1, 2012 and either sells or refinances their home, they won’t receive the mortgage exemption benefit until the 2014 tax year.
• If the seller had a mortgage exemption filed as of March 1, 2012 and the new homebuyer pays cash on the home, then the new homebuyer will receive the seller’s mortgage exemption in 2013, but lose the exemption in 2014.

The total amount of the deduction is either half of the assessed value of the home or a maximum of $3,000. The deduction value can’t exceed the amount that you owe. If you own more than one property, you can only receive mortgage deductions up to $3,000.

To claim this exemption, you’ll need to file an application with your county's auditor or recorder. You must be the legal owner of the property as of the recorder’s date stamped on the deed. Also, you’ll need to provide information on your taxing district and the amount of mortgage still owed on the property.

For more information on Indiana homestead or mortgage deductions, as well as other mortgage credits you may qualify for, visit www.in.gov/dlgf/2344.htm.

If you’re thinking of buying a new home or refinancing an existing home, the specialists at Grandview Lending can help you find the right loan solutions for your needs. Your satisfaction is our commitment to you.