Re: Shipping container

Posted by TomIn on December 19, 2018 at 03:09:17 from (23.118.149.246):

In Reply to: Re: Shipping container posted by Geo-TH,In on December 18, 2018 at 03:57:03:

George,

Your assessed value increased from $146,200 (2017 assessment/2018 pay) to $152,000 (2018 assessment/2019 pay). It is likely that your taxes will go up, but the amount of change depends on what the tax rate will be. Remember that the taxes you pay on your lot and your "main" home are calculated based on the net assessed value and the local tax rate. The taxes you pay on the garage with an attached apartment are based on the 2% property tax cap rate. The 2018 assessment figures were before you combined your two lots, and I don't know what effect this will have.

The 9% I mentioned is a another of the complications in the Indiana property tax appraisal system. I will do my best to explain.

Prior to about 15 years ago (I forget the exact year) assessed value of improvements (buildings) was the depreciated replacement value. This means the cost to build a substantially similar building - less a reduction for the affects of aging. This often meant that owners of older homes paid far less property tax than owners of newer homes with the same market value. Someone filed a lawsuit and the courts decided that this system was unconstitutional. The courts required the state to change their assessments to market value.

It isn't practical (because of the time and cost involved) to appraise every building every year. In lieu of this, the state adopted a plan that used the existing data that had been collected and created a formula to "convert" the depreciated replacement values into market values. They did this by requiring all sales of property to be reported and a data base was created. Every year they total the "market value sales" (they ignore the sales where a parent deeds his house to a relative for a small sum and forced foreclosure sales) in a given neighborhood. The total value of building sold is calculated by subtracting the total of assessed values of the land from the total of the sales. They then divide the total of the sales prices of buildings by the total of the assessed values of the buildings. The result is the "market value adjustment". For your neighborhood, this is 109%. This means that every building in your neighborhood will be assessed at 109% of it's depreciated replacement cost. If you build a new building, it will be assessed at 109% of the cost (using the cost tables I mentioned in another post).

Whether this system is fair is a whole different discussion. In my opinion, the system is reasonable if all the buildings in the neighborhood are of similar character and age AND IF THE ASSESSOR'S INFORMATION IS CORRECT. Quite often this isn't the case.

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