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Property Taxes

Dec 2, 2020

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Property Taxes 101

 

Congratulations, you finally closed on your first home. You're likely very excited... and perhaps a little overwhelmed! There are a lot of new things that you might not be familiar with yet, but we're here to help piece them all out so that you have a smooth transition to homeownership.

 

One of the things new homeowners are often have questions about is how property taxes work. If you've moved from a rental, this is not something you've ever had to worry about before. We'll help walk you through this process.

 

What are property taxes?

 

Property taxes are taxes that anyone who owns land must pay. Property taxes fund local governments at the city and county levels. Local governments assess each property's value and determine a tax structure based on what your property is worth. Naturally, if you purchase a very expensive home on a very expensive lot, your property taxes will be higher than if you were to purchase a condo. Due to local differences in cost of living and property value, the property tax fees vary from state to state, city to city, and even neighborhood to neighborhood.

 

How to pay property taxes

 

There are several different ways to pay your property taxes. Property taxes are assessed annually, and payments are due twice pear year, once in the spring and once in the fall.

 

If you don't want to pay property taxes all at one time, many lenders will allow you to pay monthly into your mortgage payment and keep your property tax funds in an escrow account. This ensures the property taxes are paid and makes you look like less of a risk to your mortgage lender. Failure to pay property taxes can put you in default and, in extreme situations, can lead to foreclosure of your home.

 

Once your mortgage is paid off, you will receive a property tax bill each year. If you paid your taxes in escrow with your mortgage, you might find it to be a good idea to save an amount of money each month based on what your previous year's tax estimation was so that you don't have to worry about a large bill at the end of the year.

 

Indiana Homestead Exemption

 

In Indiana, some properties qualify for a homestead exemption. A homestead exemption is a deduction that reduces the amount of money owed towards your property taxes. Applications for homestead exemptions are due on December 31st of the year in which you've purchased your property. You do not need to apply annually. The exemption is active on your property unless something changes, such as you get married or divorced or you sell the property. Check with your county assessor's office to find out what situations require you to re-apply for the homestead exemption.

 

To qualify for a homestead exemption, the property in question must be your primary residence in the state of Indiana, not a vacation home or rental property. Structures on your property, including your home (manufactured and mobile homes included) and garage count towards this exemption, but swimming pools do not. Up to an acre of land immediately surrounding your home can be included in the exemption as well.

 

If granted, this deduction can reduce the recorded value of your property by up to 60% or $45,000. This can make a very big difference when it comes to the amount owed for property taxes, so we highly encourage you to apply for a homestead exemption and take advantage of this option. If you live out of state and are thinking about moving to Indiana, this is just one of the incredible financial benefits that owning property in the Hoosier state allows.

 

If you're looking for assistance in finding your dream home here in northeast Indiana, be sure to give us a call and will connect you to an incredible agent who will help make your property dreams come true.