How To Read Your Assessment Notice

 

Introduction
During the Spring and Summer of 2003, most Indiana homeowners and other property owners will receive a notice of assessment from their township assessor.  This notice, known as the "Form 11," is not something that property owners receive very often, so they are not likely to be familiar with its meaning.  And, this time, the information on the assessment notice may appear especially alarming.  It's worth understanding what it means.

Assessment notices are sent to every property owner during statewide reassessments.  We are finishing up such a reassessment in 2003.  A reassessment involves the re-valuation of all land and buildings in the state for property tax purposes.  The last reassessment was completed for taxes payable in 1996, and we've been using those values ever since. The new assessed value on the Form 11 will be the starting point for calculating annual property tax payments for the next seven years.  

In December 1998 the Indiana Supreme Court found the old rules for calculating assessed values to be unconstitutional.  As a result, Indiana has decided to value property based on "market value," that is, based on the predicted selling price of houses and other property.  This means that almost everyone's assessment will go up a lot--the average homeowner will see his or her assessment double--but it does not necessarily mean that tax bills will rise. 

 

Links to More Information

To Find: Go To:
A 2-page handout summarizing Indiana's reassessment issues This website:  Reassessment handout (PDF file)

 

Contents
Reading the Form 11

Notice of the Assessment of Land and Structures
Form 11 C/I or R/A
Name and Property Description
Previous Assessment
New Assessment Effective March 1, 2002
Assessment Date
The Assessment and the Tax Bill
Your Right To Appeal
Date of Notice
Grounds for Appeal
Contact Information
 

 

Reading the Form 11
Here's an example of a "Notice of Assessment of Land and Structures," the State's "Form 11" assessment notice.  Notices will look a little different in each county, but they all contain the same essential information.  This is a notice that was mailed to a homeowner in Tippecanoe County (with the names and address removed).  Run your cursor over this notice.  You can click on the parts where your cursor shows a hyperlink, to see an explanation of what it means.  Or you can scroll down to read about it.

 


 

 

Notice of Assessment of Land and Structures
This is just the title of the form.  It says "land and structures" because statewide reassessment puts new taxable values on land and buildings, but not on personal property, which is mostly business equipment and inventories (though inventories will soon be removed). 

 

Form 11 C/I or R/A
Form 11 is state jargon for the assessment notice.  C/I stands for "commercial/industrial", and R/A stands for "residential/agricultural."  Because this is a notice for a house, the R/A box is checked.
 

Name and Property Description
Here you'll find the name and address of the property owners, the address of the property, the legal description and the property's identification number.  This has been blanked out on the notice here (the property description was added for reference).  All this information is straightforward.  The "Parcel or ID number" in the middle box to the right could be useful if you have questions for the local assessors, because it will be the way the property is identified in the county's computer data base.  The assessor probably will ask you for this number to help answer your questions.

 

Previous Assessment
This is the assessed value that was determined in the last reassessment, which was finished in March 1995, for taxes payable from 1996 through 2002.  The taxable value of property was $101,800, in total.  It says "Previous Assessment (at 100%)" because the last assessment took place when Indiana still divided "true tax values" by three for tax purposes.  The assessor would establish a value for the house using the assessment rules (which the Supreme Court found unconstitutional in 1998), then the assessment would be divided by three before the tax rates were applied.  Indiana got rid of this division by three for taxes payable in 2002 and after.  This tripled all assessments, but reduced tax rates by one-third, so it made no difference in tax bills.

The notice shows a land and structure value.  This reflects the "cost-based" method of arriving at assessments which Indiana has historically used.  The value of land was based on land sales prices, and the value of the structure was based on construction costs.  The sum is the total assessed value, which is what is taxed.

 

New Assessment Effective March 1, 2002
This is the most important information on the Form 11.  The key number is the total, here $165,900.  That's the new assessed value of the property.  Because Indiana is now a market value state, the total assessed value for 2002 should be a prediction of the selling price of your property.  You should see in the total assessment box a number that is very much like what you think your house is worth.  A recent bank appraisal of this particular house put its value at $160,000.  The assessed value missed this number by less than 4%.  It is usually thought that any prediction that comes within 10% above or below the actual selling price is an acceptable assessment.  This homeowner probably can't complain.

Many homeowners have an idea about what their houses are worth, but some do not.  If you are not sure about the market value of your house, ask yourself two questions.

1.  Would I sell my house for this price?  You'd probably answer "no" only if the assessment is too low.  If you answer "yes," the assessment might be about right.  But if you'd really be excited to receive that price, maybe the assessment is too high.

2.  Would anyone buy my house for this price?  If you answer "no", then the assessment may be too high.  A price that you'd be excited to receive is likely a price that no one would pay.  If you answer "yes", then the assessment may be about right, or it may be too low.  If you'd refuse to sell at the price if it was offered, then the assessment may be too low.

So, if you can answer yes to both these questions, your house is probably assessed correctly.  Otherwise, there may be a problem with your assessment. 

 

Assessment Date 
The text in the big white space will differ by township and county.  Many assessors are using this space to explain what the assessment means.  Others are including cards or fliers with the assessment notice mailing.  Some are even estimating what the taxpayer's tax bill might be.

The first thing this assessor wanted to say was that the total assessed value is the price the property could have sold for on January 1, 1999.  This is the assessment date.  It is so far in the past because reassessments take so long to complete, and the rules are written long before the assessment is done.  This reassessment took especially long, because the court case about assessed values delayed the reassessment date.

Sometimes figuring out the appropriate market value of a house takes imagination.  One must imagine what the house as it existed (physically) on March 1, 2002, would have sold for on January 1, 1999.  If the house actually sold in 1999, but was remodeled between 1999 and March 1, 2002, then the 1999 selling price would not be an accurate figure for comparison to the assessed value.  Something must be added to account for the remodeling.  On the other hand, if the house has been remodeled since March 1, 2002, the assessed value will not include the remodeling.  Something must be subtracted from its current value for comparison to the assessed value.

 

The Assessment and the Tax Bill 
At this writing (June 2003) we can only speculate what will happen to the tax bill on this particular home.  The assessor explains that assessments will rise, but so will the homestead exemption, and the tax rate will fall.  The assessor also says that at the time the notice was mailed, the state had not yet certified tax rates for Tippecanoe County.  You need the assessment and the tax rate to determine the tax bill.

Here's an example of what might happen to this taxpayer's tax bill.

  2002 Bill based on 1995 Assessment 2003 Bill based on 2002 Assessment
Assessed Value $101,800 $165,900
  Homestead Exemption/Deduction $6,000 $35,000
  Mortgage Deduction $3,000 $3,000
Net Assessed Value (to be taxed) $92,800 $127,900
Tax Rate $3.7318 per $100 A.V. $2.6123 per $100 A.V. *
Gross Tax $3,462 $3,341 *
  Property Tax Replacement Credit Rate 12.5709% 27.15% *
  Property Tax Replacement Credit $435 $907 *
Net Tax After PTRC $3,027 $2,434
  Homestead Credit Rate 18% of Gross Tax 15.07% of Net Tax*
  Homestead Credit $623 $367 *
Tax Bill $2,404 $2,067 *

*  Estimates

The calculations in the first column are the actual calculations for this taxpayer's 2002 tax bill.  After exemptions, deductions and credits, the taxpayer paid $2,404 on an assessed value of $101,800.  The assessment notice shows the assessed value rising to $165,900, an increase of 63%.  Should the taxpayer be concerned?  Probably not, for three reasons.

First, as the assessor notes, the legislature increased the Homestead Exemption (sometimes called homestead deduction or standard deduction) from $6,000 to $35,000.  This is a figure subtracted from the assessed value of the home before the tax rate is applied.  This taxpayer also qualifies for the Mortgage Deduction, which is unchanged at $3,000.

Second, as the assessor also notes, the Tax Rate which is applied to the Net Assessed Value (after deductions and exemptions) will decline.  This always happens in reassessments.  The reason is that the state puts a ceiling on local government tax levies (the revenue collected).  The tax rate is set by dividing the levy by the jurisdiction's assessed value.  The levy cannot rise by an extraordinary amount due to the controls, while during reassessments assessed value rises substantially.  The result is a decline in the tax rate.  Based on rates certified by the Department of Local Government Finance as of June 2003, a rate decline of 30% is plausible.  A 30% decline from $3.7318 is $2.6123.

Third, the legislature changed the way Homestead Credits and Property Tax Replacement Credits are calculated.  The details of these calculations are on a separate page, but the end result in most places will be an increase in total credits.  Note that in Tippecanoe County some local income tax revenue is used to raise the homestead credit rate above the statewide rate.

The net result is a 2003 tax bill of $2,067, which is $337 or 14% less than in 2002.  An increase in assessed value of 63% produced a drop in the tax bill.  In this tax district, in fact, it looks like any assessed value increase less than about 83% will produce a decline in the tax bill.

It is estimated that statewide, the average homeowner will see the assessment of his or her house double (a 100% increase).  Statewide, the average homeowner should see a small decrease in his or her tax bill.  Results will differ by location, but a rough rule of thumb is:

If your assessment doesn't double, your tax bill will probably remain the same or fall.
If your assessment more than doubles, your tax bill will probably rise.

 

Links to More Information

To Find: Go To:
A description of the Tax Bill for this house This website:  How To Read Your Property Tax Bill
An explanation of how the Property Tax Replacement Credit and Homestead Credit rates are calculated This website:  How Credits Are Calculated

 

Your Right to Appeal. 
The four lines of text at the top of the form are the Department of Local Government Finance's try at explaining to you what this form is, and what you can do if you don't agree with it.  The text may be hard to read, so here's what it says:

This notice indicates the assessed value of your property.  Information on the valuation of your property and a copy of the property record card can be obtained from the Township Assessor at the telephone number and address below.  You have the right to appeal this assessment by filing a Petition For Review of Assessment (Form 130) with the County Assessor within forty-five (45) days of the date this notice was mailed.  You may obtain a copy of Form 130 at the County Assessor's office.

The property record card is a record of information about the characteristics of your property, which the assessors use to value it.  It usually has a simple diagram of the building and the lot, a list of other features of the property and its neighborhood, and some information about how the property was valued.  You can call the township assessor, but in most counties the property record cards are kept by the county assessor.

You do not have to accept the valuation that the assessor places on your property.  There is an elaborate appeal process, starting with a local board, and continuing up to the state appeals board and ultimately to the State Tax Court.  Property owners have 45 days from the date the notice is mailed to file an appeal.  This date of notice shows up on the bottom right corner of the Form 11. 

To appeal, you should first contact your local assessor (township or county).  Sometimes there are simple errors that are easily corrected.  Otherwise, you'll need a Form 130, which lets the property owner say what he or she thinks the property should be assessed at, and why.  You can get a blank form from the county assessor, or on-line from the Department of Local Government Finance website, or from this website.  This form is filed with the county assessor, and considered by the County Property Tax Assessment Board of Appeals (PTABOA).  And, yes, this board really is known as the "Peeta-Bowa" in Indiana assessing circles. 

If the property owner is still not satisfied after a PTABOA hearing, he or she may appeal to the state appeals body, the Indiana Board of Tax Review.  The property owner has 30 days to file an appeal to the Board, then the Board has nine months to a year to hear the case, and three to six months after that to decide.  The property owners can ask for a re-hearing if unsatisfied with the Board's decision.  After that, the appeals process moves out of state administration, and into the courts.  An appeal to the State Tax Court is the last step. 
 

Links to More Information

To Find: Go To:
The Department of Local Government Finance's website, with a link to "Forms" where Form 130 can be found Department of Local Government Finance website
Form 130, the Petition For Review of Assessment This website:  Form 130 (PDF file)
The Indiana Board of Tax Review's summary of the assessment appeals process Board of Tax Review website

 

Date of Notice 
This is the mailing date for the Form 11.  You've got 45 days after this date to file an appeal, if you decide to do so.  This taxpayer had until June 9, 2003, to appeal.  He didn't.


Grounds for Appeal  
If you think your assessment is too high, and you want to appeal, what evidence should you present?  That's hard to know this year, because we've never been a market value state before.  Different counties may look for difference evidence.

Here, the assessor mentions "documentation that would show the value of the property as of the assessment date (January 1, 1999)."  What kind of documentation?  One can imagine several possibilities:

This last point brings up a nasty possibility.  Your assessment may be right--it may be an excellent prediction of what your property could sell for.  But if your neighbors are all under-assessed (assessments less than sales price), you will pay too much in property taxes.  If lots of property is under-assessed, the jurisdiction's tax rate must be higher to raise every dollar of property tax revenue.  You'll be paying a higher rate on your accurately assessed property than you would if all property were accurately assessed.

There's not much that taxpayers can do about widespread assessment errors (since your neighbors are not likely to appeal their low assessments).  To catch problems like that, the Department of Local Government Finance will conduct "sales-assessment ratio studies" in every county.  Such studies compare assessed values to sales prices for properties that sell, to try to measure how uniform assessments are in the whole jurisdiction.  If there are problems, it's DLGF's responsibility to work with local assessors to see that they are corrected.

 

Contact Information
The Form 11 tells you what county and township the property is in.  Indiana has both township and county assessors.  In most counties township assessors are responsible for the assessment of property, while county assessors keep the computer data bases and provide oversight. Especially during reassessment years (like 2002-03), in some counties the county assessor does the job, and in others private assessing firms are hired.

If you want to complain about your assessment, the Form 11 gives you the name, phone number and address of your local assessor.  You also could surprise him or her by calling to say how much you liked your assessed value, if it was right.