Great News For Apartment Owners!

Great News For Apartment Owners – 2% Rate Cap for All Apartment Common Areas Will Apply to 2014 Tax Bills!

The DLGF announced today (June 14, 2013) that, effective for taxes payable in 2014, common areas of residential properties will become subject to the 2% rate cap as opposed to the higher 3% rate cap applied to other non-residential real estate and personal property.

The Indiana Apartment Association should be heartily congratulated for their outstanding lobbying efforts in making this happen.

History - Beginning with the implementation of real estate tax rate caps, homestead residential property has generally been limited to a 1% tax rate, “other residential” property and agricultural land have been subject to a maximum tax rate of 2% and three and other real estate and personal property has been subject to a 3% rate cap.

Since that time, most assessors and the Department of Local Government Finance have interpreted the word “residential” to mean only the buildings containing residential units and the land under those buildings. Therefore common areas of apartments have not been deemed residential and have been separately assessed as property subject to the higher 3% rate cap.

The most recent legislature’s passage of House Enrolled Act 1545 (signed into law on May 11) defined common areas of residential properties in such a way as to clarify that they are subject to the 2% rate caps. However, the law’s effective date was somewhat unclear. With today’s memo, the DLGF has made clear that the law will apply to the 2013 pay 2014 real estate tax cycle.

Congratulations to Apartment Owners!

Posted in: indiana apartment association, indiana mulitfamily, Indiana Multifamily Taxes, Indiana Property Tax Law, multifamily