Hello everyone,

We've been feverishly trying to keep up with assessment notices that have been released in Northwest Indiana in recent months, and are still waiting for a few townships to release theirs.

In Porter County, all notices have gone out and it appears that the trend has been an overall increase for residential properties and little or no change, in commercial and industrial properties.  In fact I've seen some commercial decreases.  What does this mean?  Basically this years' Porter County tax bills will probably show a small shift of burden from businesses to homeowners.

I've had a little experience helping a few friends of mine recently with their residntial assessments, which are generally hard to contest.  In this particular case however, we had a small, distinct neighborhood that had been grouped with a few, more popular developments around them, and based on a detailed appraisal analysis it was determined that the subject neighborhood trending factor was simply creating assessments that were well above market value.

The assessor was very good too work with and in fact, the end result was a segregation of the subject neighborhood into it's own specific neighborhood.  Their were enough reasonable sales to create a separate trending factor, and when applied, the assessments were within 2% of market value.

This is important in that it demonstrates that the conversion to market value and the resulting delineation of neighborhoods is a detailed and painstaking process that takes time.  Now that assessors have been able to record sales for a longer period, it becomes easier to delineate neighborhoods and to insure that values are reflective of true market value, thus insuring fair and equitable taxation.

In Lake County, we are still waiting for commercial assessments basically north of US highway 30.  Highland, Munster, Hammond, East Chicago, Whiting, Gary, Griffith, Lake Station, Hobart and Merrillville being the major cities yet to release values.  I believe that the delay is to coordinate the release of assessments with the release of tax bills so that taxpayers can relate the assessment to the actual taxes.  In reality, an assessment could be set at $1 or $1 million and without knowing the tax rate, it is meaningless.  I do know for a fact that commercial industrial property values in Lake are going UP.

I do encourage anyone to give me a call or send me an email with any questions or concerns.   Whether you have received a notice yet or not, the key is to be prepared to appeal as early as possible and not to be restricted by the 45 day appeal deadline.

Remember that trending is now an annual occurence and it is more important than ever to be ready to deal with your tax assessment.  I'm sorry to make this sound like an ad or commercial, but I can't tell you how many of my clients would have saved an extra years' worth of tax if they had been a little more proactive.

Have a good one folks! 

The neverending saga continues... 

Date posted online: Wednesday, April 04, 2007
Panel advances property tax overhaul
Huge plan tied to slots at horse tracks
BY PATRICK GUINANE
pguinane@nwitimes.com
317.637.9078

INDIANAPOLIS | A key Senate panel barreled ahead Tuesday with a dramatic makeover of local government finances that supporters say will send homeowners immediate and lasting relief from smothering property taxes.

Local officials would get some financial breathing room as well, but only if they shift spending to an income tax -- a remedy the Lake County Council has shunned for more than three decades.

"They need to go raise the income tax," Senate Tax Chairman Luke Kenley, R-Noblesville, said following a nearly four-hour hearing on his property tax plan.

It's a suggestion many state lawmakers have made, given that Lake often cries broke despite being one of only two of Indiana's 92 counties without an income tax. The cries have grown louder since the General Assembly approved a circuit breaker to cap all tax bills at 2 percent of property's assessed value.

To ease the cap's burden on local governments, Kenley would raise the cap to 3 percent for businesses and landlords.

"I was afraid they wouldn't pass it on to tenants," Kenley said.

The revised circuit breaker, now part of House Bill 1478, cuts projected local government losses statewide by more than two-thirds -- from $426 million to $139 million. Porter County, for instance, wouldn't lose a cent under the lower wattage circuit breaker.

But the cap still would zap a combined $126 million from cities, schools and other taxing units in Lake County. Kenley suggests county officials ease that pain by approving a 1 percent income tax, which would raise $76 million.

Kenley considered forcing local governments to finance all new spending with a county income tax but ultimately decided against it.

Cities and towns, which continue to plead for more money, could only get relief if their county approves a new income tax. Kenley's plan allows for a tax increase of up to 0.5 percent to fund police, fire and other public safety needs.

Another new element in Kenley's plan is a homestead credit aimed at cutting homeowners' tax bills by 5 percent yet this year. That one-time break relies on lawmakers approving separate legislation that would legalize slot machines at downstate horse racing tracks, bringing the state an $800 million windfall.

The Senate Tax and Fiscal Policy Committee advanced Kenley's tax plan 12-0, but House Democrats -- needed to approve any eventual solution -- expressed reservations. The chief concern centers on a move to end $2 billion in payments to local governments and have the state use the money to assume some local school and welfare costs.

"I think major portions of it will pass," Sen. Sue Landske, R-Cedar Lake, said after voting Kenley's plan out of committee. "Everyone is clamoring for property tax reform."

 

Copyright © 2007 nwi.com

I know local business owners are pretty excited about the 2010 2% tax cap circuit breaker, but I've been predicting all along that it will never, can never, become reality.  The fact of the matter is, local government can't afford it.

Well, here is one recent article from The Times Newspaper that gives you an idea of the panic this vote getting legislation is already causing:

New tax plan generates more skepticism than relief

I know everybody involved in real estate, or who owns real estate has been anxiously awaiting the new assessment figures for 2006 payable 2007 taxes.  Or at least I hope you know that these numbers will differ from what they were for 2005.  The townships in the region have been working feverishly to complete data collection and submission of sales data for their districts to the State for the purpose of trending assessments.

The assessors are hoping to release Form-11's (Notice of Assessment) in 30-45 days according to a reliable source. 

As a property tax specialist, I keep a close ear to the ground when it comes to this issue.  I have been fortunate to review unofficial figures for many of my clients.  If the state approves the proposed values the general "trend" is UP.  What does this mean to taxpayers?

The first reaction is generally that taxes will go up as well, but that is not necessarily the case.  In THEORY...if every assessment within a particular taxing unit is trended the same percentage, and the annual budget remains unchanged, the tax rate will decrease a corresponding percentage thus keeping the actual net tax levy the same.

In the real world however, I believe that there will be an unequal change between commercial, residential and agricultural.  I predict that commercial property will experience a larger trend than residential, and residential a larger trend than agricultural, thus shifting the tax burden from 1. Ag to Res, and 2. Res to Commercial / Industrial.  People need to be prepared to deal with this, especially owners of income producing property ie: rental homes, apartment complexes, office and strip centers.  Fluctuations in property taxes can make or break income property.

I encourage everyone to spread the word.  Attn: Property Owners, Realtors, CPA's, Attorney's, Property Managers and Homeowner's...You have 45 days to appeal your assessment from the time you receive formal notice.  Don't let that window pass by.  If you don't know what to do, please give me a call.  I can help!

Bear Down Chicago Bears!!!  It looks like the Bears that lost to Green Bay decided to take todays game a little more seriously.  Its not to say that they didn't make us a little nervous once again, but thanks to Robbie Gould we get to take a crack at New Orleans.  Let's hope that Urlacher and the Defense can handle Reggie Bush and Deuce McAllister!!!  Let's Blog on Da Bears for awhile eh?!?

So you've received a notice of assessment on your house and the notice states that if you feel that you could sell your house for the assessed amount or more the value is fair.  We have gone to a "fair market system" now right?

Wrong!

Well, not necessarily...fair market value involves multiple approaches to value: replacment cost, sales comparison and income approach.  Obviously the income approach doesn't apply to residential properties, but the replacement cost and sales comparison methods do.

The local assessor under state guidelines is using replacement cost with market multipliers and depreciation to determine your fair market value.  What can you do?  I recommend that every homeowner go to the assessors office and retrieve a copy of their "Property Record Card".  This information sheet lists all the details of the valuation of your home.  In replacement cost, value is determined by the actual improvements of the property.

Homeowners can take a half an hour with a tape measure and determine if the assessor's staff has actually measured the home correctly.  I've seen 1200 SF homes measured at 1400 SF.  I've seen basements assessed as comletely finished when in fact, they're completely unfinished.  I've seen homes assessd as having a brick exterior when maybe only the front has brick.  Perhaps the space above the garage is unfinished but because the assessor wasn't able to gain access to the home they assumed it is finished.  I've seen simple data entry errors.

The point is this:  your local assessor is a "mass appraisal firm".  They have very little time in which they have to handle a very big job in assessing an entire township.  By Indiana law, if a homeowner denies the assessor entry to a house, or if the assessor cannot gain entry due to work schedules, they have the right to ASSUME the interior details.   By taking a little time out of your schedule to verify that the information listed on the property record card is accurate you can save yourself some cash.  Most assessors have a desire to be accurate and they are generally very fair to deal with.  Dont forget that they are elected and need your vote.  They are a part of the community and have a job to do just as we do.  If you do find an error with your assessment, stop in and talk to your assessor.  I think you'll find them eager to fix any mistakes.

If this info happens to help someone out, I'd love to hear about it!

For those of you (you know who you are) who want to know a little more about the 2% circuit breaker go here:

http://www.in.gov/dlgf/news/circuitFS.html

And for the real information nuts out there try this one:

This circuit breaker has been a big issue with residential taxpayers and I think its important for anyone who is the any aspect of real estate as a career to understand property taxes.  It's such a large expense over ones lifetime and its very important to keep a handle on anything that can keep that bill down!

Enjoy!! 

Hello All...

My neighbor and I were talking and he asked me about his son's property tax bill on a house in Hammond, Indiana.  I did a little research and found out that his son didn't file for his homestead exemption with the County Auditor's Office.

Now I know most of us take advantage of this huge exemption but let me share with you how much difference it makes.  First of all the exemption is 35,000 of assessed value.  In a typical area that's at least $700 a year in savings.

In Lake County, there was special legislation enacted for high tax rate areas.  If you have the homestead exemption, you also get a homestead credit which in this case another $550 bucks.

Long story short, my neighbors son paid $2100 bucks in tax this year and he should have paid $780.  Realtors, remind your new homeowners that they have to appear in person at the Auditors office and FILE THE HOMESTEAD EXEMPTION! 

I've had a lot of clients ask me recently what trending is and what it will mean to their bottom line.

I like to think of trending as a "mini-reassessment" of real estate values for tax purposes.  The township assessor is directed (by the State) to analyze all the recent sales disclosures within a particular "neighborhood" and determine if there has been an upward or downward trend in market values.  The assessor is to then apply an equivalent influence factor to the enitire neighborhood thereby bringing values current with the market.

Obviously, people tend to believe that this is just a tactic to raise taxes.  My experience and profession lead me to look at it from a different perspective. After the 2002 general reassessement, people were shocked at the increases they saw in commercial real estate tax and many homeowners were also forced to absorb large increases, particularly in northern Lake County.  This is really a result of such a long period between reassessements.  In the 2002 case it had been 7 years since the previous assessment.

What I feel trending will do is create smaller and less noticeable adjustments to market value over the period between re-evalutions thus eliminationg the "shell shock" that has typically come with a large scale reassessment.

The big question I have for property owners is this: would you rather have annual adjustments to your real estate tax or one larger one every 7 or 8 years??