Do Investors pay 2 times the property taxes in Indianapolis?

[Eddie Knoell]

Hello Bigger Pockets, 

I am interested in purchasing a single family residence investment property in Indianapolis and I was told by the real estate agent that if I purchase it as an investment property that the property taxes would double. They mentioned that primary residence owners get a tax exception. The property is in Marion county which covers the whole city. I have never heard of this before. Is this accurate?

[Ross Denman]

Yes, investment properties are taxed at 2% of assessed values, but often times this is less than homes in other markets. Zillow is usually the quickest way to get this information if you do not have local MLS access... just click on the pricing/tax history and it will give you the assessed value and tax bill. Figure your deals at 2% of the assessed value. If the assessed value is really low (this will be the case with very distressed properties or very distressed areas) you may want to figure the deal at 2% of 90% of ARV as the assessment will likely go up in the next year or two. While you will be saving money with the low tax bill for a year or two, ensure that the deal doesn't fall apart when the city adjusts the assessed value. For instance, I have a home that we rehabbed that was assessed at $11,000 but its ARV is about $125,000. The tax bill is ridiculously low, but I worked the numbers at a $100k assessment or $2,000/year to ensure that I was still hitting my criteria after the adjustment.