When Greenwood resident Jerry Brown opened his 2023 tax bill, he was shocked.
Property taxes for his condo on Polk Street nearly doubled from last year. His total tax bill went from around $363 in 2022 to $692 in 2023. The property assessed value jumped by over 30%, going from a valuation of $75,800 in 2022 to $102,000 in 2023.
Brown was preparing for his property taxes to increase some, based on warnings from experts over the last year, but he didn’t expect the increase to be this much, he said.
“Disbelief, shock, anger, all of the above. I really, I couldn’t believe it, to be honest, that it had gone up that much,” Brown said.
Brown first called the Johnson County Treasurer’s Office and he was given a form to appeal the property assessment. He then talked to a friend who works in real estate, who explained to him how the hot housing market during the pandemic drove up homes’ assessed values over the last two years.
“I was just pretty upset that it had gone up that much. I was concerned how the assessed valuation to got up so much from one year to the next,” Brown said. “I tried to do some reading and research online, and I found out a lot of home prices just during that period just went up a lot.”
Assessed value and tax bills
A home’s assessed value plays a big role in calculating property taxes. Tax experts have said the rapid rise in assessed value across the state is largely influencing how much property tax bills have increased.
This trend of high AV growth has been seen statewide, largely because of the state of the hot housing market between 2020 and 2022 and general economic trends as a result of the COVID-19 pandemic, according to a February study by Policy Analytics LLC and economist Larry DeBoer for the Association of Indiana Counties, or AIC.
The assessed value of all properties is calculated by the county assessor in each county. Increases and decreases in assessed values of residential real property, when factoring out new construction, are largely due to home sales and prices, said Mike Watkins, Johnson County assessor.
Watkins, who is in his first term as county assessor, is not the same person as Mike Watkins, a local retired Realtor. Both men have been mistaken for being the same person recently since property assessments came out.
Tax bills are two years behind the housing market. The 2022 assessed values, which reflect taxes to be paid in 2023, are calculated by the assessor’s office from 2021 house sale price data. The hot housing market between 2020 and 2022 is having a direct effect on the high property taxes being paid this year.
The median home price in Johnson County in January 2021 was $229,000, and it was up to $290,000 by December 2021, according to data from the MIBOR Realtor Association, the professional organization representing Central Indiana realtors. More people were also buying houses in those two years, increasing the demand of an already-low home supply, which can drive up prices. Homes stayed on the market on average for less than 20 days in 2021.
Total gross assessed value, or GAV, of all properties as of Jan. 1, 2022 — which is the assessed value date used for taxes paid in 2023 — increased by 13.2% statewide. In Johnson County, it was higher between 15 and 20%, according to the AIC study.
Homestead assessed values in Johnson County grew exponentially by over 20% between pay 2022 and pay 2023 tax years. Johnson County was one of seven counties in the state to see the highest homestead GAV growth, the study shows.
Residential tax liability in Johnson County averaged 24% higher than in 2022. Residential taxpayers make up 59% of the tax burden in the county in 2023, according to the AIC analysis.
If homeowners are not satisfied with their assessed value calculations for this year, they can appeal, Watkins said. An appeal begins with filing a Form 130, the “Taxpayer’s Notice to Initiate an Appeal” which can be found on the Johnson County website under the “Assessor” page. The appeal should detail why the assessed value is being disputed.
A local assessing official will meet one-on-one with the property owner and then send a recommendation to either approve or deny the appeal. If it is denied, it would then go before the county Property Tax Assessment Board of Appeals.
As of Wednesday, 222 appeals had been filed, Watkins said. The deadline to appeal a property assessment is June 15.
AT A GLANCE
How to file a property tax assessment appeal
Deadline: June 15
1. Fill out a Form 130, or an intent to appeal. It can be found on the “Assessor” page on the Johnson County website, or visit the Johnson County Assessor’s Office at 86 W Court St. in Franklin for a hard copy.
2. An appraiser will then meet with you for an informal conference about your property. The appraiser will either approve or deny the appeal then.
3. If the appraiser denies the appeal, it will have a hearing before the Property Tax Assessment Board of Appeals.
4. If the board denies the appeal, instructions will be provided on appealing the decision to the Indiana Board of Tax Review. After being heard by the Indiana Board of Tax Review, taxpayers may also seek a review by the Indiana Tax Court.
The local spending factor
How much a residential property tax bill is each year is closely related to changes in the assessed value of the home, Watkins said. Other factors that may affect a tax bill include a property owner signing up for deductions they may qualify for and changes in the levy set by the various governing bodies in Johnson County.
Governments set a property tax levy as part of the budget process, and the levy is the revenue they intend to collect to pay for their government services, such as public safety and schools. The state also imposes a maximum levy local governments can collect.
The extent to which local governments can increase their annual budgets is based on the six-year average of nonagricultural income across the state. The State Budget Agency calculated the 5% maximum levy growth quotient for 2023 property tax levies. It was the highest rate in 20 years, largely due to income growth and inflation in 2021, the Indiana Capital Chronicle reported earlier this year.
Referendums passed by voters for schools or local governments additionally increase the taxes paid in those communities. For example, residents within the Clark-Pleasant school district have been paying higher taxes for a few years now, after voters approved a referendum for school safety funding in 2018.
Tax rates for local governments are calculated from the Indiana Department of Local Government Finance, or DLGF, using a formula. A local government’s tax rate is set by dividing its levy by its total net assessed value — which is the assessed value after deductions are accounted for on properties. That tax rate is multiplied by the net assessed value of each property, and the sum for all of them adds up to the levy each government needs for its budget.
Typically, when assessed values come in high, that would cause tax rates to decrease to equal out to the maximum levy set by the state, which is 5%. However, AV is growing above average, higher than the maximum levy growth. Some cities and towns in the county — Greenwood, Bargersville and Trafalgar — appealed to go above that max levy growth because the AV growth in those areas increased above average. Municipalities are allowed to submit this appeal, if average assessed value growth over the last three years exceeds the statewide average maximum levy growth quotient by at least 2%.
Indiana also has a 1% property tax cap on homesteads, meaning a property owner does not pay more than 1% of their homestead’s gross assessed value each year, unless a tax referendum is passed locally. These caps don’t change as assessed value grows, so as a home value goes up, so does the amount allowed to be paid under that 1%.
Most municipalities in the county increased their budgets for 2023. Inflation has affected everyone, and local governments have likely seen increases to their budgets, largely because of that, said Elizabeth Alvey, Johnson County auditor. The county auditor is in charge of calculating the taxes collected in the county.
“It looks like they’re spending more but all of their operational costs have gone up. You know, for the highway trucks, fuel is skyrocketing,” said Amy Thompson, first deputy auditor. “Just like at home, you’re spending more on your own groceries.”
Some property tax relief coming
State lawmakers passed House Bill 1499, which will expand a supplemental homestead deduction. This legislation will not affect the tax bills that were due on May 10.
Homeowners with properties worth less than $600,00 would see assessed value deductions of 35% for taxes this year, 40% for 2024, 37.5% for 2025 and and 35% for those due afterward, the Indiana Capital Chronicle reported. Those with properties worth more than $600,000 would get smaller deductions.
The bill would also raise income eligibility for senior citizen property tax deductions. And it would limit school referendum tax levies approved before this year that are payable in 2024 to a 3% increase of this year’s maximum tax, or to the 2024 maximum.
Other provisions would make it easier for property owners to contest their property tax assessments and let counties choose to provide their own property tax relief.
HB 1499 originally would have temporarily lowered the property tax caps, but those plans were scrapped at the end of the session.
Brown said he is glad state lawmakers took some action to help people with high property tax bills. He reached out to all of his local legislators to let them know the high bills concerned him. He can afford to pay his bills this year, but he was more worried about others on fixed or lower incomes.
“I’m happy they’ve done something. But it looks like that this was foreseeable, so I wish they could have done something earlier,” Brown said.
With deductions, Alvey said it is important for homeowners to remember to apply for them. She said many people call asking why their tax bills are so high, and say they did not know they could apply for various deductions.
“So many people don’t realize they could have probably saved half their money,” Alvey said.
Residents can get help applying for property tax deductions for next year by visiting the “Auditor” page on the Johnson County website or calling the auditor’s office at 317-346-4310.
