Indiana applies “caps” to taxpayers’ property tax liabilities, depending on the type of property. The caps are really credits against taxes imposed above the designated percentage. For the March 1, 2010 assessment date (for taxes payable in 2011), the cap / credit under Ind. Code § 6-1.1-20.6-7.5 applied as follows:
- A person is entitled to a credit against the person’s property tax liability for property taxes first due and payable after 2009. The amount of the credit is the amount by which the person’s property tax liability attributable to the person’s:
- homestead exceeds one percent (1%);
- residential property exceeds two percent (2%);
- long term care property exceeds two percent (2%);
- agricultural land exceeds two percent (2%);
- nonresidential real property exceeds three percent (3%); or
- personal property exceeds three percent (3%);
of the gross assessed value of the property that is the basis for determination of property taxes for that calendar year.
In Spelbring v. Elkhart County Assessor (Aug. 23, 2013), the Indiana Board considered whether a vacant lot should receive the 2% cap as “residential property” or the 3% cap applied to “nonresidential real property” for the March 1, 2010 assessment date. Owner argued that the parcel was zoned for residential use but was classified as commercial, erroneously resulting in application of the 3% cap. The Assessor countered that the property was, in fact, classified as residential, and that the land was considered “residential excess acreage.” (Page 2, ¶ 4(a).)
The Board examined the definitions of “residential property” and “nonresidential real property.” “Residential property” includes, generally speaking, non-homestead dwelling units and certain supporting land or common areas. Ind. Code § 6-1.1-20.6-4(1) and (2). Also qualifying is “[l]and rented or leased for the placement of a manufactured home or mobile home, including any common areas shared by the manufactured homes or mobile homes.” Ind. Code § 6-1.1-20.6-4(3). “Nonresidential real property” includes undeveloped land that is not part of the area of a homestead or residential property (and excludes agricultural land). Ind. Code Ind. Code § 6-1.1-20.6-2.5.
The Board ruled that the 3% cap applied, explaining that the property “does not qualify as residential property under the tax cap statute—it has no dwelling units and is not leased for placement of a manufactured or mobile home.” (Page 4, ¶ 6(a).) But the vacant lot “does qualify as nonresidential real property because it is undeveloped land that is not agricultural land, part of a homestead, or residential property as defined by Ind. Code § 6-1.1-20.6-4.” Id. The Auditor correctly applied a 3% cap. Id.