Purdue News
Purdue News
|
|
October 15, 1999 Tax assessment rules hike residential taxes mostSource: Larry DeBoer, (765) 494-4314;DeBoer@agecon.purdue.edu
WEST LAFAYETTE, Ind. – Tax bills for residential property would go up more on average than farm and business property taxes under the state's proposed new assessment rules, according to a Purdue University specialist on state and local public policy. "Given the rules as they are currently proposed, the average homeowner will see a 6.1 percent hike in property taxes. The average farmer could expect a 3.2 percent hike," said Larry DeBoer, professor of agricultural economics. He predicted that business owners may actually see their tax bill go down 5 percent, because the new rules would increase business assessments less than they increase residential assessments. His calculations about the State Board of Tax Commissioners' rules come from computer models using county assessments and tax rates. Hoosier taxpayers will have a chance to speak their mind on the assessment rules changes during a tax board hearing set for 1 p.m. Tuesday, Nov. 9, in the Government Center South auditorium in Indianapolis. DeBoer said the state tax board, in an effort to remedy an assessment process deemed unconstitutional by the Indiana Supreme Court, decided that assessments had to be based on market value, which is the predicted selling price of a property. He said that basing taxes solely on market value would increase homeowner tax bills by 35 percent on average. To lessen this shift, the tax board made some additional changes, including: • A new shelter allowance that would reduce residential assessed values by $16,000 to $23,000 right off the top. • An upward adjustment of the personal property tax assessments for business equipment and inventories. DeBoer said that will offset some of the decrease in taxes that businesses would realize from the new real property assessments. • An increase in the farmland base rate from $495 to $1,050 per acre. "More than doubling that rate will not mean a doubling of farmers' taxes," DeBoer said. He explained that assessments for all types of property are going up, so what matters is the increase in each type of property compared to all the others. He said some farmers in some counties could see their property taxes increase by nearly 50 percent, with those at the opposite extreme experiencing a more than 10 percent decrease in taxes. All in all, DeBoer said, homeowners still face the greatest impact from the tax changes. He said tax bill changes will vary a lot by county, with homeowners in some counties seeing increases of more than 57 percent, while homeowners in others will see decreases of nearly 78 percent. He said tax bill changes will vary so much because counties have different mixes of farm, residential and business property. Also, the shelter allowance cuts the assessments of lower-valued homes by a bigger proportion than higher-valued homes. "In counties with more lower-priced housing, residential taxpayers do better," DeBoer said. He predicted those homeowners who may see the greatest tax hikes are those who: • Own older homes in good condition. He said that's because these homes would have a greater market value and would not benefit from the current assessment formula that tends to decrease property taxes on homes based on age and style. • Own homes in counties where there are a lot of business properties. He said that because taxes are being shifted from businesses to homeowners, in counties with lots of business property and little homeowner property, each homeowner would see a bigger tax increase. DeBoer said the rules have come under a great deal of criticism, with groups from the Chamber of Commerce to tax assessors asking the state to delay putting them into place. There is also some question about the constitutionality of the "shelter allowance" on residential property. "There's an old saying that the gratitude of those whose taxes decrease is never as great as the anger of those whose taxes increase," he said. If the rules go unchanged – either by the tax commissioners, legislature or other governmental unit – then they would be used to assess property values by March 2001 for property taxes to be paid in 2002. Writer: Beth Forbes, (765) 494-2722; bforbes@aes.purdue.edu Purdue News Service: (765) 494-2096; purduenews@purdue.edu Related Web site:The 2001 Real Property Assessment Manual Draft as posted by the Indiana State Board of Tax Commissioners.
|
