About 2,700 property owners in Allen County will have to prove they deserve the homestead exemptions they’ve been claiming in the last three years or face massive tax increases – plus back taxes and penalties.
The homestead exemption on property taxes is worth 60 percent of the assessed value of the property or $45,000, whichever is less. For the owner of a $90,000 house, having the exemption means taxes are charged against only half the value.
But the exemption can be used on only one home: The homeowner’s principal residence. For years, officials across the state have suspected that people have been claiming homestead exemptions on, say, their house in Allen County and a vacation cottage in another.
The Allen County Auditor’s Office sent out forms in 2010, 2011 and 2012 asking homeowners to verify their exemptions. As of a year ago, about 40,000 property owners hadn’t done so, despite the risk their property taxes could skyrocket.
Now, Auditor Tera Klutz has hired Tax Management Associates, an auditing firm that specializes in local and state government taxes, which has investigated the property tax records from every homeowner in the county who had filed a homestead exemption.
The company went through the county’s databases comparing the records to information found about the property owners using LexisNexis’ analytic and research technology. The company flagged property owners who had a homestead deduction filed in Indiana or anywhere else in the U.S., had a home in a trust or similar red flags, and Monday Klutz’s office began mailing questionnaires to the 2,700 on the list.
I believe now is a good time to start the audit because each of the last three years taxpayers claiming a homestead credit were given information about who qualifies for the homestead and were also required to verify their homestead, Klutz said. Taxpayers who were unfamiliar with the law had the opportunity to report and remove any homesteads they were not eligible to receive.
Based on the answers people give on the questionnaire, the auditor’s office will either consider the person approved for the deduction or denied. If denied, the property owner will be required to pay additional taxes and penalties for the years the deduction benefit was improperly received.
It is important to have accurate records for homestead property, Klutz said. If taxpayers are claiming more than one homestead on different properties, it increases the taxes for the rest of the homeowners and businesses in Allen County.
For more, contact the Homestead Audit Call Center at 888-640-5506.