I learned this today and just double checking on biggerpockets to make sure it is true."Indiana uses the 1-2-3 Tax Cap rule. In a nutshell, Owner Occupied properties owe 1%, Non-Owner Occupied properties owe 2%, and Commercial properties owe 3% of the assessed property value each year."
I was entertaining the idea of investing in Indiana as an out of state investor, but this may deter me some.
Realtor · Highland, IN · Member since 2015 · 47 posts · 29 votes
6y
@Matt Wells I live and invest in northwest IN and what you stated is correct. The good thing is taxes are extremely low to begin with in most places in the state that it is still an extremely viable market. I pay just under $5k a year in taxes on one of my properties, but I'm still cash flowing well and the property has appreciated far above inflation the past 3 years. I can't speak for all of the state, but NWI is a great place to invest. Hope this helps.
A quick google search shows it’s only a cap. If you aren’t up against the cap, it really doesn’t matter. So maybe you are capped a bit more than the neighbors. What do your numbers say? Does it really matter?
Realtor · Highland, IN · Member since 2015 · 47 posts · 29 votes
6y
@Matt Wells I live and invest in northwest IN and what you stated is correct. The good thing is taxes are extremely low to begin with in most places in the state that it is still an extremely viable market. I pay just under $5k a year in taxes on one of my properties, but I'm still cash flowing well and the property has appreciated far above inflation the past 3 years. I can't speak for all of the state, but NWI is a great place to invest. Hope this helps.
Property Manager · Griffith, IN · Member since 2015 · 1k+ posts · 913 votes
6y
@Matt Wells The fact that there's a cap % alone shouldn't scare you from investing in Indiana. It's actually nice because you can predict what your taxes could be at some point and run your numbers from there. It's valuable info to know because if you're buying an owner occ property at 1%, you better double your taxes when running your numbers. Saying that, it may take 1-2 tax cycles for the county to adjust from the owner occ status to non and a cycle in Indiana is 1 year. Indiana is also different from other states in that a new sale does not reset the assessed value that determines the tax amount. I've sold properties for $200K that are still assessed at $65K and the county can only bump that up to 10% each year based on what my tax attorney has told me.