In Indiana, there are two property tax days. May 10 and November 10. Seems simple enough except for when you identify what you are actually paying on those dates. Or how it is calculated.
If you are somebody that really likes to get into the nitty-gritty of government finances, the State of Indiana website offers a Citizens Guide To Property Tax. At this site you can learn the process of valuation and assessment. The purpose of this post is to simply answer the question “what are we paying when we pay our property taxes tomorrow” (for last minute payers)! If you dig into the Indiana finance site it may remind you of learning how a hot dog is made….something you probably really did not want to know!
If you ask anybody involved in real estate in Indiana about property taxes the first thing you will likely hear is that Indiana property taxes are paid in arrears. At this point most people nod their heads like they know what that means. Unless you are pretty sharp on your accounting you are faking it when you nod your head! In arrears means that the taxes you pay in the current year are the taxes due from the previous year. The primary reason we pay taxes in arrears is that many counties are not current on their assessments and it ultimately may take the better part of a year to certify their rates.
So, what are you specifically paying on tax day May 10, 2013? The answer is property taxes due for the period January 1-June 30 2012. On November 10, 2013 payment will be due for the period of July 1-December 31, 2012. That is what arrears looks like in practice.
Ever since the invention of escrow accounts, many homeowners with mortgages never actually feel the effect of paying their property taxes. They may actually see it as a deduction on their federal taxes (which it is but it really is not like you are saving money!). Mortgage holders with an escrow pay a pro-rata portion of these estimated taxes every month and then the escrow administrator makes the property tax payments as due for May 10 and November 10. It is a forced savings plan for mortgage holders to make sure taxes are paid and do not interfere with the rights of the mortgage holder.
You can now pay your property taxes on-line (for a small fee) and it is well worth it. Tax Day used to be a busy one at the county tax offices and local banks who accepted tax payments. It is so much easier to pay these from your computer!
Now you know all you need to know about Indiana Property Tax Day. I don’t expect there to be much celebrating.