If you are buying a home on at least 1 acre of land in Indiana, you can take advantage of the Indiana Homestead Deduction. This deduction reduces your property taxes by adjusting your assessed property value downward.

What is the Indiana Homestead Exemption?

The Indiana Homestead Exemption is a deduction from your assessed property value. It consists of two parts:

• The Standard Homestead deduction
• The Supplemental Homestead deduction

The Standard Homestead deduction is the lesser of either $45,000, or 60% of the gross assessed value of the property.

You calculate the exemption, and subtract it from your property value, then use that modified assessed value to calculate the property taxes you owe.

If you qualify for the Standard Homestead deduction, you also qualify for the Supplemental Homestead deduction.

It equals 35% of the net assessed value (if the net is less than $600,000) or 25% of the net AV (if the net is greater than $600,000).

You apply it to your net assessed value after you have taken the Standard Homestead deduction.

Standard Homestead Deduction Qualification and Details

Here is some additional information provided by the state of Indiana regarding the Standard Homestead deduction.

Applies to the dwelling (and those structures attached to the dwelling – deck, patio, etc.) and the surrounding 1 acre (even if acre straddles multiple parcels)

• Property must be applicant’s principal place of residence
  • An individual’s “true, fixed, permanent home to which the individual has the intention of returning after an absence.” 50 IAC 24-2-5
• Applicant must:
  • own the property;
  • be buying it under recorded contract or recorded memorandum of contract that provides that the buyer is responsible for the taxes; or
  • Occupy the property owned by a trust seeking deduction in conformity with IC 6-1.1-12-17.9

For full details on the Homestead Exemption, you can view this presentation from the Indiana Department of Local Government Finance (DLGF), titled “Property Tax Deductions and Exemptions.” Be sure to read the Indiana Code as well, which is the legal document that defines the exemption.

So long as you continue to meet the eligibility requirements, you can automatically renew the Homestead Exemption every year.

It is important to make sure that you really do qualify before you attempt to claim this exemption. If you do so incorrectly, eventually, an auditor will catch it. At that point, you may owe up to three years’ worth of overdue taxes. You also may owe additional penalties on top of that.

Buy a Home in Indiana

Grandview Lending, Inc is based in Indianapolis. We can help you purchase a home

anywhere in Indiana with a USDA loan or another type of mortgage. We can also answer questions about property taxes and the Homestead Exemption, though we urge you to talk to your tax professional for detailed information and recommendations. You can also contact DLGF directly.

To get started, please give us a call at (317) 255-0062 to schedule your mortgage consultation.