Property Tax Terms
Annually Adjusting Property Values - Annually adjusting property values are part of Indiana's move to a market-based assessment system that began in 2002. Similar market-based assessment systems are currently being used in 48 other states.
The annual adjustments are calculated by comparing the prior year assessment with current sales data from a neighborhood. The difference, positive or negative, will be used to create a factor that assessing officials will apply to the property's assessed value to bring it to current market value.
Under the old system, real estate was generally only reassessed every 10 years. that left taxpayers with a large change in their assessments every decade. Annual adjustments curb that large lump sum change in assessments by annually adjusting values based on sales.
Appraisal - A supportable estimate of the fair market value of a property arrived at through application of guidelines that consider a number of market conditions and economic factors.
Appraiser - This is the title given to the individual who conducts the appraisal and writes the appraisal report. Appraisers are usually certified by a state regulatory agency. In Indiana, appraisers are certified by the Indiana Professional Licensing Agency.
Arrears - The term used when taxes paid in the current year represent the taxes owed for the previous year. Property taxes in Indiana are paid in arrears and are typically due annually in two installments – May 10 and November 10.
Assessment - The official act of discovering, listing and appraising property for ad valorem tax purposes. “Ad valorem” tax refers to any tax imposed on the basis of the monetary value of the taxed item. In Latin, the term literally means “according to value.”
Assessment Appeal - The formal process through which property owners may dispute the assessed value of their property.
Assessed Values (AV) - The total dollar value assigned to all real property and improvements plus personal property subject to taxation. Effective March 1, 2001 the assessed value will be true tax value. Locally elected assessors determine property values with appraisal guides prescribed by the Department of Local Government Finance. These values may be changed by the county board of review. The Department of Local Government Finance assesses all public utilities and may make adjustments to other assessments.
Budget Order - The budget order is a critical document in calculating tax bills. The order contains the state's certification of the approved budget, the estimated assessed value, the tax rate and the levy for each fund of each taxing unit in a county. The order also gives the total tax rate and property tax replacement credit (PTRC) rate, homestead credit rate and the local homestead credit rate for each taxing district.
Circuit Breaker - The method used to ensure that no more than a certain percentage of a property’s assessed value is paid in taxes. The percentage represents the “cap” for property taxes on the property. If the taxes for a property exceed the cap percentage, a property tax credit is issued for the dollar amount above the cap. The actual property tax to be paid would then equal the dollar amount of the property’s assessed value multiplied by the circuit breaker percentage cap. For example, if a property with an assessed value of $100,000 has a tax bill of $2100 and the circuit breaker percentage cap is 2%, a tax credit in the amount of $100 would be issued for that property, thereby reducing the property tax amount due to $2000 or 2% of its assessed value.
Controlled Project - Controlled projects are projects financed by bonds or a lease that exceed $2 million, including the funds to cover the amount of bonds issued and interest rates that will be used to pay the total cost associated with the bonds. Examples include new school construction, new library construction, remodeling and renovations of public buildings (including schools, libraries and local government offices), and beautification projects. A project that the government expects to pay for using funds other than property taxes that are exempt from the levy limitations is not a controlled project.
Homestead Deduction - The homestead deduction is the most commonly used property tax deduction in Indiana. It allows homeowners who use a property as a primary residence to qualify for a reduction of up to one-half of the assessed value or $45,000, whichever is less, thereby lowering the property owner’s property tax obligation.
Levy - The product of a specified tax rate and the assessed value. Levy terms include tuition support, maximum, and excessive.
Market Value - The most probable price, estimated in terms of money, which a property would bring in a sale between a willing buyer and seller under arms-length conditions, in an open market with adequate market exposure and reasonable marketing time.
Personal Property - Personal property typically involves moveable items that are not permanently affixed to a physical structure. Examples of personal property include: farm equipment, appliances that are not “built in” to the structure, vehicles, furniture and similar items.
Petition-Remonstrance Process - The petition and remonstrance is the process that allows for Hoosier taxpayers to object to a “controlled” project proposed by a local unit of government.
Property Tax Controls/Tax Control Boards - Property Tax Control Boards are designed to allow expert review of construction projects as part of the State's on-going effort to ensure fiscal responsibility. Boards are comprised of experts in their fields of practice such as business, engineering, architecture and education.
Two Property Tax Control Boards currently exist in Indiana: the School Property Tax Control Board and the Local Property Tax Control Board.
Each Board reviews construction plans and meets with local officials who seek approval for construction projects. After thorough review, the Board makes a recommendation to the Commissioner of the Department to approve, disapprove or modify the project. The Commissioner is the approval authority for all projects.
Property Tax Deductions - Deductions reduce the amount of assessed value a taxpayer pays on a given parcel of property. There are a number of property tax deductions available to Indiana property owners; however the homestead deduction is the most common and most widely used of these. Detailed information regarding allowable Indiana property tax deductions may be found on the DLGF Web site in the “Information for Taxpayers” section.
Property Tax Levy - The property tax levy is the amount of money that a taxing body requires to be collected through the property tax system.
Property Tax Rate - A percentage applied to each taxing body's assessed valuation which will produce the amount of that taxing body's levy, or, in other words, the levy divided by assessed value equals the tax rate. The tax rate is expressed in terms of "dollars per $100 of assessed value".
Property Tax Replacement Credit - Property Tax Replacement Credits (PTRC) are a state program of tax relief. The percentage PTRC rate is subtracted from the gross tax. This would cost the local governments lost revenue, so the state pays local governments the PTRC amounts out of its budget. The taxpayer does not pay this amount. It is paid by the state to the local governments.
Real Property - The interests, benefits and rights inherent in the ownership of physical real estate.
Trending - Trending is a way of assessing the value of real estate. Trending requires assessors to research sales of properties in a particular area over the previous two years. Using that information, assessors then estimate the values of other properties in the same area to determine an assessed value.
In the past, the assessed values of real estate were adjusted only after a reassessment, which came as far apart as 10 years. Unlike reassessments, trending will occur every year.
Sales Comparables - Sales comparables are sales of properties which are used to indicate the value of a property that is being assessed or appraised. Comparable sales are normally similar in condition, style, size, location and utility to the property being evaluated. For example: for a one-story brick ranch-style home in average condition, with 4 bedrooms, 2 bathrooms, a living room, kitchen and family room and 2-car garage, located in a specific neighborhood, a comparable sale would be a one-story brick ranch-style home in average condition, with 4 bedrooms, 2 bathrooms, a living room, kitchen and family room and 2-car garage, ideally located in the same neighborhood as the home that is being assessed or appraised.
Special Assessments - An assessment against real estate levied by a public authority to pay for public improvements, e.g., sidewalks, sewers, street improvements, etc. or an amount levied against individual owners in a condominium or cooperative to cover their proportionate shares of a common expense.
Taxing District - This is the term for the geographic area within which taxing units have the authority to fund themselves via property taxes.
Taxing Unit - An organization or government body having the statutory right to fund itself through the property tax system. Examples include schools, park districts, villages and townships.
- How much property tax do I owe?
- Why haven’t I received my tax bill?
- Where can I locate a form?
- Where can I find out how much homes have sold for in my area?
- What are property tax deductions and how do I know if I qualify for one?
- How are property taxes determined and calculated?
- How do I file for the Homestead Credit or another deduction?
- What can I do if I missed the deadline to file for my tax deduction?
