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PAULA HENRY
REALTOR ®
RE/MAX Excel
Office: 317-272-5002
Direct: 317-605-4174
Fax: 866-373-5769

Indianapolis Property Taxes - A Homebuyer’s Story

September 10th, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers, Indy Home Sellers

A Phone Call

A recent phone call from a gentleman about the amount of real estate property tax he had to pay for the reconciliation bill in July made me think about what a mess this whole year has been for homeowners, both those who are buying and those who are selling.

This particular person closed on his home in July 2007, a really bad month to close on a home in Indianapolis. Let me explain – Last July was the month the property taxes were stayed by the Governor. When tax bills were received last year, (late, I might add) there was an uproar from homeowners in Indianapolis.

The tax paying citizens of Indianapolis marched at the Governor’s home over the July 4^th Holiday last year and back then, I thought, what irony. It was Independence Day and we definately needed some independence from property taxes and their effect on our freedom to live in our homes without fear property taxes would be the final straw to break the proverbial camels back.

A Recap

The property tax bill received in July 2007 was for taxes due for the first half of 2006. The people thought their voice was heard when the Governor placed a stay on taxes at 2005 rates, so all propety could be reassessed. It was a temporary reprieve, backed by a promise of a rebate.

So, everyone paid the bill at the new temporary rate. They again paid the “new, temporary” rate in November of 2007. Okay – now we got through that year, except - whoops – the new assessments are in and now the “REAL” bill will go out for the difference. This bill was the reconciliation bill (C-bill) everyone receievd in June of this year. Now, remember, this is a reconciliation of taxes for 2006, payable in 2007; actually paid in 2008.

I’m really sorry if I have lost you by now. It’s almost unbelievale, except for this homebuyers story

A Homebuyer’s Story

The gentleman who called me bought his home in July, 2007 about the time the original 2006 tax bills were sent out. For his home, the taxes were around $7000. semi-annually and he would have received a full year plus almost a month of tax credit……oh, about, a little over $14,000………..but taxes were stayed and instead he received a credit based on the previous years taxes (2005) of about $4000. semi-annually. Guess what happened to the other $6000.00? Yes, that is SIX THOUSAND DOLLARS. He received a nice little bill from the county for that amount, commonly known as the C-Bill.

Now, here’s the problem – he DID NOT live in the home in 2006. Here it is 2008, and he is paying $6000.00 in taxes for a home he did not occupy at the time the taxes were accrued.

When the Governor made this nice little concession for all the great taxpayers of Indianapolis, there were no guidelines to go by for determining what tax the buyer would face in the future – no, we didn’t receive those reassessments until June 2008. All we could do was go by the current certified taxes, which were wrong! Or guess at an amount which could be negotiated for future taxes. Let’s see, how does one negotiate an unknown amount, especially when we don’t know if the new amount will be different?

What’s Next

Remember, it’s not over yet – oh yeah, we now have assessments and real dollar amounts, but we still don’t have May 2008 bill, which may come out in November,(I’m guessing after the election) then we will have to wait for the November tax bill, then we will have the May tax bill again, hopefully in May 2009. That will be three tax bills payable in a six month period.

Talk about confusing – if you have your taxes escrowed and they are paid by your lender, please read this story.

I’d love to hear your stories about how the property tax situation has affected you.

Here’s a few helpful sites about real estate property taxes:

Marion County Tax Estimator

Citizens Guide to Property Taxes

Tags: Property+Taxes, Indianapolis

Authored by Paula | Discussion: 5 Comments »

Indianapolis Property Taxes - A Question

September 9th, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers

This is a week of tax questions.
If you have been a reader here for any time at all, you know the Indianapolis property tax issue is a favorite of mine The following question came from someone who is starting their search for a home in Avon a city just west of Indianapolis. I love working with people who really do their research and am happy to help people with their real estate questions

The question:

We’re getting ready to look at some properties in Indianapolis (actually, more towards Avon) and I’m having trouble finding what the property tax is to calculate into my estimated payment.

Could you help me out with that?

Of course, I am happy to help – here’s my answer:

In Indiana, there are currently no set taxes, as in a percentage. Each city determines their budget needs, then applies property tax based on the needs of government for that particular year, by applying a percentage to the assessed value.

Currently, in Avon, property taxes average 1.5-2.0% of assessed value. Assessed value is usually fairly close to actual value, then we have specific exemptions for homeowners who meet criteria for those exemptions. The standard (most common) exemptions are Homestead (owner occupied) and Mortgage, which together equal $48,000 or 50% of the property’s assessed value, whichever is less. It plays out something like this.

A $200,000 home in Avon with an assessed value of the same, with a mortgage exemption and homestead exemption filed, at a rate of 1.75% would pay $1330.00 semi-annually.

Assessed value - $200,000
(minus) Mortgage Exemption - $3,000
(minus) Homestead Exemption - $45,000
Equals - $152,000 X 1.75 =$2660.00/2 = $1330.00

The same home without the exemptions filed would pay $1750. semi annually.

The peculiarity of our taxes are, they are paid in arrears, so the taxes due in November will be for taxes assessed for the last half of last year.

A buyer who was purchasing a home today would receive a tax credit from the seller for the last half of last year and all of 2008 taxes due, up to the date of close. In this case, it would equal about $3192.00. Then the buyer would be responsible for any future taxes from the date of closing.

In March, legislation was passed to lower taxes in the State of Indiana and those new rates will be effective for the year 2009, payable in 2010.

For 2009 taxes, payable in 2010, the maximum rate for owner occupied homes will be 1.5%.

In 2010, payable in 2011, taxes will be capped at 1.0% for owner occupied homes.

Whether they will keep the exemptions in place when the rate is capped has yet to be determined. If they do, it will be a bonus.

By 2010, the same $200,000 home (with exemptions) will pay $760.00 semi-annually. Without the exemptions, it will be $1000.00 semi-annually.

Are Your Exemptions Filed

Tags: Property+Taxes, Indianapolis

Authored by Paula | Discussion: No Comments »

Simple Real Estate Definitions : Home Inspection

September 9th, 2008 categories: Indy Home Buyers, Indy Home Sellers, Real Estate Terms

A home inspection is a complete, top-to-bottom, visual check-up of the structure and systems of a house.

It is meant to be an objective determination of a home’s condition.

A home inspection usually takes 3-6 hours to complete, depending on the size of the home.

During the inspection process, the inspector will examine all of the following components of a home:

Home exterior including doors, decks, and vegetation
Heating and cooling systems for leaks and efficiency
Electrical systems for safety and soundness of design
Plumbing systems for venting, distribution, and drainage

In addition, the inspector will review the roofing system, the home’s interior, and several other parts of the property.

A home inspection may be ordered by a home owner or by a home buyer.

For a home owner, an inspection can detail a home’s shortcomings and provide a roadmap for repairs. This can help a person prepare his home for sale because “major issues” can be addressed in advance of listing.

For a home buyer, a home inspection physically reviews a home under contract, identifying structural flaws that may impact the home’s desirability. This is essential for the negotiation process because no home is “perfect” – even new ones!

A home inspection highlights potential long-term trouble spots and the likelihood for expensive home repairs. This is why real estate professionals often recommend inspecting a home immediately after signing a purchase contract.

To find a qualified home inspector in your area, ask your real estate agent for a referral, visit the American Society of Home Inspectors Web site or the National Association of Certified Home Inspectors.

Source
American Society of Home Inspectors
Frequently Asked Questions on Home Inspections
https://www.homeinspector.org

(Image courtesy: Anderson Home Inspections)

Tags: Home+Inspection

Authored by Paula | Discussion: 3 Comments »

With Increases To Its Fees, Fannie Mae Makes Buying A Home More Expensive

August 7th, 2008 categories: Indy Home Buyers, Real Estate Financing

Fannie Mae added new Adverse Market Delivery Charges and Loan-Level Pricing Adjustments Fannie Mae announced a new risk-based pricing model and additional mortgage delivery fees this week, adding to the cost of buying a home.

Risk-based pricing was first introduced by Fannie Mae this past April. It added new, mandatory loan fees for high-risk borrowers while rewarding a small group of low-risk borrowers with fee credits.

In the updated model, even 720 credit scores with a 20 percent downpayment won’t protect mortgage applicants from the risk-based fees and they can range as high as 2.750 percent, depending on credit scores and downpayment size.

Fannie Mae will continue the practice of rewarding high-downpayment borrowers with fee credits.

Fannie Mae’s second pricing change involves the Adverse Market Delivery Charge and it is not risk-based — it applies to all applicants equally.

First introduced in December 2007, Adverse Market Delivery Charges are mandatory surcharges on all conforming mortgages. The fee was initially a quarter-percent. It’s now doubled to 0.500 percent.

Combining risk-based pricing and delivery fees, mortgage applicants have two choices to pay them:

As a one-time fee, paid at closing, payable to the lender
As an interest rate increase, payable month-after-month to the lender

The one-time fee is calculated by multiplying to fee amount by the applicant’s loan size and dividing by 100. The interest rate increase is calculated as a general rule, where each 0.500 percent in fees can be substituted for a 0.125 percent increase to a mortgage rate.

The fees become “official” October 1, 2008, but lenders are expected to deploy them much sooner.

Authored by Paula | Discussion: No Comments »

Indianapolis Real Estate at the Bottom of the List

July 21st, 2008 categories: Indianapolis Real Estate News, Indy Home Buyers, Indy Market Trends

Home buyers seem to be concerned about the future value of the home they buy today. And, rightfully so! The national media makes it sound like all real estate markets are in deep trouble. Not the case; all real estate is local. If you are in the market to buy a home in Indianapolis, you will love the latest news from PMI Group.

PMI Mortgage Insurance Company recently released it’s Market Risk Index of the 50 largest Metropolitan Statistical Areas (MSA). These are the people who insure residential mortgage loans.

In plain english, the company rates major cities for the risk of property values being less in two years than they are today. At the bottom of the list is Indianapolis-Carmel. They rate the entire area of Metropolitan Indianapolis. In this case, it’s a good thing to be at the bottom.

The Indianapolis-Carmel area has less than 1% chance of property values declining in two years.

This is the list of cities who rank at the bottom.