Marion County Buyers - Beware of Tax Situation

If you planning on purchasing an Indianapolis home in Marion County in the next 10 months you need to be careful about the current property tax situation or you could end up paying dearly.  For those not familiar with what is going on I will provide a way oversimplified explanation of what has happened:

1)      The entire state re-assessed residential real estate and property taxes went through the roof for a variety of reasons.

2)      People went crazy and protested when they got their tax bills.

3)      It came to light that commercial property was way undervalued in comparison to residential real estate.

4)      The Governor ordered Marion County (and a few others outside of Indianapolis) to re-assess both commercial and residential real estate.

5)      Residents of Marion County were told to pay the amount on their old tax bill.

6)      Re-assessments will be taking place over the coming months and homeowners will be re-issued a new tax bill and will be asked to pay the difference between the 2006 and 2007 tax bill amount.

 
Item number 6 is what you need to watch out for if you are planning to purchase a home in Marion County.  Because taxes are paid in arrears and the current amount of tax due is unknown, you as the buyer must include language in the contract that holds the seller responsible for their portion of the difference in property taxes due for 2006 and the pro-rated portion of 2007. 

The standard language in the contract says that the tax credit and prorated taxes will be based on the last know tax amount.  Since the new tax bills are in effect null and void, the last know tax amount is what the seller is charged and the burden of the tax increase for 2006 and 2007 falls on the buyer.  To prevent this from happening you and your real estate agent need to address this at time of contract or you will be stuck paying the difference between the “last know tax amount” and the actual tax amount for 2006 and 2007.  This is not fair because you are paying the property taxes for the seller’s while they occupied the property.

 
My suggestion is that if the title company will allow you to do it, escrow a reasonable amount of money in their account and when the new tax bill comes out have the seller pay the difference (if taxes went up) for the portion of time when they occupied the property.  If a title company will not escrow the money, your best bet is just to get an agreement on an addendum and then at least you have a contract which they are obligated to fulfill.    

 Please remember it is imperative that you address this AT TIME OF CONTRACT, once the contract has been signed by all parties all bets are off.

Rebate Real Estate not only knows how to adeptly handle your contract but also offers a 50% commission on all Indianapolis houses. 

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