Residential Real Estate and State Government and Taxes and Property taxes and Government & Economic Development and Government and Real Estate & Retail

Deadline looms to refile for homestead tax break

December 10, 2012

Time is running out for some Hoosier homeowners to claim the Indiana Homestead Deduction as a tax break, even if they have done so in the past.

A law, passed in 2009, says homeowners will lose their deduction beginning in 2013 if they don’t complete and return a homestead verification form by Jan. 1.

County auditors began including the verification form in property tax bills in the spring of 2010. But thousands of homeowners in the Indianapolis area still have yet to submit it, particularly in heavily populated Marion and Hamilton counties.

Marion County Auditor Billie Breaux said her office has received forms from roughly 150,000 homeowners, or more than half, and is getting about 100 in the mail daily.

Breaux said she might send a mailer alerting those who have yet to refile. But “it’s expensive to send out the letters, and we’re on a very strict budget right now,” she said.

Homeowners are allowed to file for the deduction on their primary residence only. The aim of the legislation is to reduce tax fraud by Hoosiers who claim the deduction on more than one residence.

The form requires homeowners to include the last five digits of their Social Security number and the last five digits of their driver’s license—information that previously was not required.

The Indiana Department of Local Government Finance maintains a state database of homestead deduction information provided by county auditors. The database currently contains a homeowner’s name and address. But if the same name is listed five times, there is no way to determine if it’s five different people with the same name or if one person is claiming the deduction on multiple properties.

“There were so many people that had multiple homestead deductions, so the verification came up as a way to come clean,” said Rep. Cherrish Pryor, D-Indianapolis, who wrote the legislation. “We just want to make sure that people who are double-dipping are not pushing their tax burden on other people.”

The additional information on the verification form should prevent people from claiming multiple deductions under different names, Pryor said. Homeowner Robert Smith, for instance, now shouldn’t be able to file for the deduction on a rental unit under the name Bob Smith.

State law requires the state to mail the form with all property-tax statements through 2012. The form, however, must only be completed once by the homeowner, by Jan. 1.

Still, in Hamilton County, about 8,000 homeowners hadn’t submitted the verification form as of Nov. 27, even after they should have received at least five notifications, Auditor Dawn Coverdale said.

The last notification sent to 11,000 homeowners cost the county $8,300 in postage, she said.

But the county should recoup the costs in the additional tax money collected from scofflaws. The auditor’s office so far has caught about 2,000 homeowners who had filed for the tax break on more than one property, including one who had claimed a vacant commercial property as a residence, Coverdale said.

“It’s taken a lot of money and time,” she said, “but I think it’s been beneficial in cleaning up a lot of misapplied deductions.”

Both Breaux and Coverdale in Marion and Hamilton counties said they’ve heard rumblings that legislation could be introduced in the next session to extend the filing deadline.

Pryor said she’s not been approached by a fellow lawmaker proposing such an extension, “but if that’s something the auditors feel is needed, I probably would support it,” she said.

Average homeowners who fail to refile for the tax break risk losing hundreds of dollars annually in tax credits.

Anyone caught filing for multiple homestead deductions will have to pay back taxes, in addition to a fine of 10 percent of the amount owed.

Homeowners who are unsure if they filed the statements should call their auditor's office, at (317) 327-3001 in Marion County and (317) 776-8401 in Hamilton County.

Additional information on homestead verification forms can be found here.
 

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