Forty states provide a tax break related to property taxes on owner-occupied properties, according to the Retirement Living Information Center. In most of these states, the program is a partial exemption from the property tax itself. In a few states, such as Indiana, the tax break is through a tax credit paid by check after you have paid your property tax.
To qualify for the homestead credit in Indiana, you must reside in your own home, which includes mobile and manufactured homes, on land not exceeding one acre and you must have owned the property by March 1 of the current property tax year. Buyers in contract can qualify if the purchase contract provides for them to pay taxes as of March 1. Only one individual is permitted the credit per property.
The credit is equal to 20 percent multiplied by the property tax liability attributable to the homestead. Prior to 2003, the percentage was less. The rate may be increased by a state budget agency. The homestead credit may be combined with a host of other property tax deductions, exemptions and credits. The homestead credit is funded by the state of Indiana. The state reimburses county governments for the cost, and the county sends a check to the taxpayer.
Homeowners must fill out a claim for homestead property tax standard/supplemental deduction, State Form 5473. The form must be filled out each time the property title changes, including for the transfer of your property into your trust. From time to time, the state or county can also require you to fill out a verification form to keep the tax credit. The county auditor determines each taxpayer's homestead refund amount between November 10 and December 20 of each year.
Other Indiana Property Tax Benefits
Indiana offers property tax deductions for homeowners over age 65, blind and disabled, disabled veterans, World War I veterans and spouses of World War I Veterans. In addition to the homestead credit, all homeowners who have a mortgage for their owner-occupied homes are entitled to claim a mortgage deduction, and all homeowners living in their own homes on properties not exceeding one acre are entitled to a standard deduction. All but the homestead credit are taken as deductions from assessed value.
- Retirement Living Information Center; Taxes by State; January 2011
- Howard County Auditor: Indiana Property Tax Benefits
- Indiana Statutes: IC 6-1.1-20.9
- City of Indianapolis: Claim for Homestead Property Tax Standard/Supplemental Deduction
- WTHR.com; Homeowners Confused Over Tax Credit Form; Chris Proffitt; April 2010