The Indiana Department of Local Government Finance (“Department”) completed its statewide, general reassessment of all real property in Indiana on March 1, 2012. This reassessment, the first since March 1, 2002, will have a significant impact on the assessed value of real property in Indiana through its influence on assessor cost tables and individual counties’ location cost multipliers.
So what does this mean for you or your business? It means there is a possible cost savings opportunity to reduce your property tax liability through the appeals process.
The assessor’s cost tables are part of a manual assessors use in determining a property’s assessed value. The Department has calculated and published cost tables for use in the reassessment that differ from prior versions of the tables. The underlying property models (representing a typical property for each type – residential, commercial, and industrial) were updated to reflect current building practices and property use and include economies of scale into the methodology. In addition, this new assessment will reflect more physical depreciation since real property is now older relative to the assessment date.
The reassessment will also affect the individual county cost multiplier used by each county assessor in accounting for the varying construction costs across the state. We have seen a drastic change in construction costs since the previous general assessment in 2002 and the 2012 assessment will likely reflect those changes.
How do you know if your property assessment changed? Each county in Indiana is required to notify its property taxpayers of a change in their assessed value. This is typically done through the issuance of a Form 11 assessment notice, which can be issued any time following the reassessment. A county can, however, choose to have the tax bill serve as the form of notice of the reassessment. Taxpayers then have just 45 days from the date on the Form 11 (or tax bill) to file a Form 130 to preserve their appeal rights. The above-described deadlines are firm and a taxpayer must timely file their property tax appeal prior to the deadline or he or she will lose their rights to the appeal for that tax year.
If you get a notice of assessment, how can you determine you property’s value? Indiana currently uses a “market value in use” approach, which takes into consideration the assessor’s manual cost tables, a property’s physical depreciation and a county’s location cost multiplier. The market is the new driver for your assessment however, your assessment may increase or decrease for any or all of the above reasons. There are 3 different approaches for determining your property’s “market value in use”: (1) Cost Approach, (2) Sales Comparison and (3) Income Approach. Determining the appropriate to use can be key in calculating the proper assessed property value for your property.
What does this mean to you? It means that you should consider appealing the assessed value of your property to more accurately reflect its fair market value, which can reduce your overall property tax liability.
If you would like more detailed information on how this state-mandated reassessment may affect your property tax bill, or how to appeal the assessed value of your property, please contact G. Michael Schopmeyer, Mark Samila, Ryan Schulz, Steve Theising or a member of our Real Estate Law team.