Indianapolis Area Real Estate Blog

Indianapolis Property Taxes - A Homebuyers Story

A Phone Call

A recent phone call from a gentleman about the amount of real estate property tax he had to pay for the reconciliation bill in July made me think about what a mess this whole year has been for homeowners, both those who are buying and those who are selling. This particular person closed on his home in July 2007, a really bad month to close on a home in Indianapolis.

Let me explain – Last July was the month the property taxes were stayed by the Governor. When tax bills were received last year, (late, I might add) there was an uproar from homeowners in Indianapolis.

The tax paying citizens of Indianapolis marched at the Governor’s home over the July 4th Holiday last year and back then, I thought, what irony. It was Independence Day and we definately needed some independence from property taxes and their effect on our freedom to live in our homes without fear property taxes would be the final straw to break the proverbial camels back.

A Recap

The property tax bill received in July 2007 was for taxes due for the first half of 2006. The people thought their voice was heard when the Governor placed a stay on taxes at 2005 rates, so all propety could be reassessed. It was a temporary reprieve, backed by a promise of a rebate. So, everyone paid the bill at the new temporary rate. They again paid the “new, temporary” rate in November of 2007. Okay – now we got through that year, except - whoops – the new assessments are in and now the “REAL” bill will go out for the difference. This bill was the reconciliation bill (C-bill) everyone receievd in June of this year. Now, remember, this is a reconciliation of taxes for 2006, payable in 2007; actually paid in 2008. I’m really sorry if I have lost you by now. It’s almost unbelievale, except for this homebuyers story

A Homebuyer's Story

The gentleman who called me bought his home in July, 2007 about the time the original 2006 tax bills were sent out. For his home, the taxes were around $7000. semi-annually and he would have received a full year plus almost a month of tax credit……oh, about, a little over $14,000………..but taxes were stayed and instead he received a credit based on the previous years taxes (2005) of about $4000. semi-annually. Guess what happened to the other $6000.00? Yes, that is SIX THOUSAND DOLLARS. He received a nice little bill from the county for that amount, commonly known as the C-Bill. Now, here’s the problem – he DID NOT live in the home in 2006. Here it is 2008, and he is paying $6000.00 in taxes for a home he did not occupy at the time the taxes were accrued.

When the Governor made this nice little concession for all the great taxpayers of Indianapolis, there were no guidelines to go by for determining what tax the buyer would face in the future – no, we didn’t receive those reassessments until June 2008. All we could do was go by the current certified taxes, which were wrong! Or guess at an amount which could be negotiated for future taxes.

Let’s see, how does one negotiate an unknown amount, especially when we don’t know if the new amount will be different?

What's Next

Remember, it’s not over yet – oh yeah, we now have assessments and real dollar amounts, but we still don’t have May 2008 bill, which may come out in November,(I’m guessing after the election) then we will have to wait for the November tax bill, then we will have the May tax bill again, hopefully in May 2009. That will be three tax bills payable in a six month period. Talk about confusing – if you have your taxes escrowed and they are paid by your lender, please read this story.

I’d love to hear your stories about how the property tax situation has affected you. 


#1 By Emily in Austin at 9/14/2008 0:23 PM

Oh goodness, that does sound incredibly convoluted....hard even for real estate experts to understand, let alone consumers trying to go it alone. In Austin, there was a tax break on houses last year, but then the value of homes changed, sometimes upwards so for several people I know, that tax benefit was very brief and now they owe the same they did before, if not just a little bit less.

#2 By Paula at 9/12/2008 7:55 PM

Joe - Yeah, it doesn't get much more complicated than what we have going on here in Indy. Hopefully, by next May, we'll be back to taxes as usual!

#3 By joe peffer at 9/11/2008 8:13 AM

Wow Paula, this sounds unbelievably complicated and confusing for Indy home owners.
Columbus home owners always have a bit of a hard time understanding that real estate taxes are paid in arrears and that the Seller credits the Buyer at closing, but throw in the scenario you describe and, well, yuck.
Indianapolis home owners are lucky they have a Realtor like you looking out for them.

#4 By Paula at 9/15/2008 0:36 PM

Emily - That sounds like what we went through. Homeowners really gained nothing from the stay on taxes; the assessments came back much the same. You know the saying, pay now or pay later. Later is now!

#5 By don drew at 9/17/2008 5:33 AM

the tax man cometh and the tax man goeth..but the politico's know that the tax man is their best friend and there will always be one in their'll never change...

#6 By Pierre at 6/27/2009 1:49 PM


I am currently trying to purchase a house. I have found several within my price range between 60,000 to 100,000. My problem is that the taxes have been on the houses that I really like are 6,000 to 7,000. Since the taxes would be rolled in to the house payment, they don't look at what are taxes would actually be for 2009, they are going off the last listed taxes for the 2007. This then makes the houses that we could easily afford into ones that with an additional $600 a month payments. It seems outrageous to me and I know that there have to be alot of other frustrated people out there because of our messed up property taxes.

#7 By Paula at 6/27/2009 2:47 PM

Pierre -

This is a common problem with homes in Indianapolis in your price range. The reason is, most likely, there are no current exemptions filed. It will take at least another year after you file your exemptions for them to be applied. therefore lowering your tax burden. In the meantime - the lender has no alternative but to qualify you based on the current taxes, which makes the circumstances you describe all too common.

It is a very frustrating experience for many first time buyers in your price range and one I have faced often with my own clients. We have to look at taxes first before we even look at a home. Outrageous is a perfect description!

I think the city should look into using the $15,000 credit they are using for first time buyers of foreclosed homes to assist ready, willing and able home buyers to reduce the cost of the home, so they can afford the taxes. Since they are not having much success obtaining the renovation loans, let's use the money toward reducing the tax burden for first time buyers. My thoughts:)

Good luck to you and look at taxes first before you fall in love with a home - until we can get the city to do something about the tax burden.

#8 By Portland Oregon Realtors at 10/14/2009 9:31 AM

What do you say when the value of your home and your families home value drops $100,000 combined in a single year, yet have 6,000 more in taxes to pay this year? Legislation can not come quick enough in many cases.

#9 By Paula at 10/23/2009 8:12 PM

Portland -

This is one of many reasons we see so many foreclosures. Property assessments are not being corrected quickly enough. Many municipalities were quick to create new budgets based on inflated property values and now, are taking their time giving home owners credit for over-inflated assessments. People who want to sell, can't because they owe too much, taxes are too high and it's a struggle to make the payments. I encourage home owners to try and negotiate a reduced interest rate with their lender and appeal their property taxes.

#10 By Portland Realtors at 10/26/2009 4:25 AM

This sounds really complicated... Especially for first time home buyers.. it really pays off to choose a professional realtor that knows the business well.. Nice one Paula.. :)

- Kim

#11 By Dreiman at 3/27/2012 5:38 AM

You know the saying, pay now or pay later. Later is now!

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