For purposes of property taxes, builders who use their homes as “model residences” may qualify for a fifty percent (50%) deduction of the assessed value of the model residence. Indiana Code § 6-1.1-12.6-1 provides that a “model residence” means real property that consists of a single-family residence, single-family townhouse, or single-family condominium unit that has never been occupied as a principal residence and is used for display or demonstration to prospective buyers or lessees for potential acquisition or lease of a similar type of residence, townhouse or condominium unit on the same property or other property.
Model residences, however, do not include any of the land on which the residence, townhouse or condominium unit is located. Additionally, real property that is used by the owner as the owner’s regular office space may not be considered a model residence for purposes of the deduction. However, the model residence deduction does not prohibit the use of a garage or other space in the real property to store or display material used to promote the real property or similar properties or as a space for meeting prospective buyers or lessees.
The model residence deduction is available for no more than four (4) assessment dates as follows: (a) one assessment date for which the model residence is assessed as a partially-completed structure, (b) the assessment date for which the model residence is first assessed as a fully-completed structure, and (c) two assessment dates that immediately succeed the date in (b).
The model residence deduction terminates if the real property is sold to a person who does not continue to use the real property as a model residence. However, if the ownership of the model residence changes and the new owner will continue to use the real property as a model residence, the new owner may claim the model residence deduction only for the assessment dates that would have applied had the ownership not changed.
If a property owner qualifies for the model residence deduction, the property owner must file a State Form 53812 (revised December 2011) with the county auditor for each assessment date the property owner wishes to receive the deduction. A property owner is limited to three (3) model residence deductions in Indiana for any assessment date. Additionally, if a property owner’s real estate qualifies for more than one deduction, the property owner may not receive a deduction under both statutes for the same model residence. Further, a property owner may not receive a deduction for a model residence located in an allocation area as defined by Indiana Code § 6-1.1-21.2-3.
For more information on Indiana model residence property tax deductions or any related matter, please contact Shannon Frank at (812) 423-3183 or SFrank@KDDK.com; or contact any member of the KDDK Construction Law or Real Estate Law practice teams.
About the Author
Shannon S. Frank, a Partner at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, has more than 20 years’ experience in the practice of business law, construction law, estate planning and probate administration, health care law, and real estate law. Shannon takes prides in giving exceptional service to her clients, recognizing that relationships with clients play a significant and essential role in providing tailored and comprehensive legal advice.