(Noblesville, April 30, 2020) - Every year, thousands of Hamilton County homeowners pay property tax. As part of her office’s mission to provide transparency and excellent customer service, Hamilton County Auditor Robin Mills thinks it is important to help people understand, not only the necessity and value of property taxes, but also the calculation behind how property taxes are determined.
Property taxes are a major source of income for counties, libraries, townships, cities, and towns. The different boards, councils, and legislatures meet to decide the appropriate tax rate. Each hold budget hearings to determine how much money needs to be allocated for providing various services required by the local community including: education, police and fire, libraries, local infrastructure like highways, roads and streets, parks and operations including salaries of the local units of government.
According to the Department of Local Government Finance (DLGF), property taxes represent a property owner’s portion of the local government’s budgeted spending for the current year. Increases and decreases depend upon a local government’s fiscal management, the assessed valuation of a property and/or local tax rates, which are based on the budget proposals and revenues received and submitted by local government taxing entities that provide services to each community. Local spending is the reason for property tax rate increases and decreases, depending on local fiscal management.
“The County Assessor is responsible for an annual assessment of every property in Hamilton County. This includes both land and the buildings on it,” said Mills. “The assessor calculates the value of a property based on general property attributes like its size and the year of construction, as well as the prices of recent sales in the area, in order to determine the property’s market value, also known as the gross assessed value.”
The County Assessor then transfers the data on each property’s value, to the County Auditor. The auditor then applies deductions, exemptions and other valuation adjustments and sends these “Certified Net Assessed Values” to the DLGF. The DLGF reviews the values sent by the auditor and converts the values to property tax rates, by dividing each local unit’s approved budget amounts by the assessed value for each unit.
“The DLGF sends their rates back to the county, then the treasurer and I work together to calculate, generate and mail tax bills out to each taxpayer in the county,” said Mills. “Property taxes are calculated on the net assessed value of your property. We take the gross assessed value provided by the assessor and apply deductions. The most common deduction is the Homestead Standard Deduction, which is equal to 60% of the gross assessed value up to a maximum of $45,000. It is available for owner-occupied primary residences. The Supplemental Homestead Deduction is also for owner-occupied primary residences. This is equal to 35% of assessed value (after the Homestead Standard Deduction has been applied) up to $600,000 and 25% of assessed value over $600,000.”
Property owners may be eligible for other deductions. Information on those deductions and eligibility requirements can be found on the county’s website at: www.hamiltoncounty.in.gov. Once deductions have been subtracted, what is left is the property’s net assessed value. This is the amount to which local tax rates are applied.
Tax rates are recalculated every year by local taxing authorities, such as schools, counties, townships, cities, towns and libraries. The rates are based on the total revenue the taxing authority is allowed to collect (the levy) and the total tax base (the total assessed value in the district).
For example, if a school district can collect $1,000,000 in revenue and the tax base is $1,000,000,000, the tax rates will be .01%. That’s $1,000,000/$1,000,000,000. The 0.01% is the nominal rate, which is apply to the net assessed value.
A very useful tool for understanding your tax bill, is the TS-1 Comparison Statement that accompanies every tax bill. This statement compares assessed values, taxes, deductions and rates taxes from the prior year to the current year.
Real Estate owners in the state of Indiana must pay taxes on their property each year. Taxes are divided into two annual installments (For 2020 May 11 and November 10th). On March 19, 2020, Governor Holcomb issued Indiana Executive Order 20-05, which waives penalties for late-paid property taxes. Property taxes remain due on May 11, 2020 however, counties are to waive penalties on payments made after May 11, 2020, for a period of 60 days (until July 10, 2020). This waiver does not apply to tax payments which have been escrowed by financial institutions on behalf of property taxpayers.
Understanding property taxes can be confusing, but please be assured that our offices are here to answer any of your questions or concerns.