Indiana /Real Estate Tax

what is a mortgage exemption

Question

Hello, my husband and I are planning to relocate to the Indianapolis/Fishers area. As I have been reviewing real estate listings, I notice two things. First, how are taxes there paid. I keep seeing "semi". Does that mean twice a year and can this amount be included in your normal mortgage. Second, what is this tax exemption? Is that a credit that I am paid or is that something that I have to file with the taxing authority. Confused. help:)) Thanks for your help.

Answer

The taxes are in fact paid two times per year, May 10, and Nov. 10. This year all the tax bills came late and we just received for this year and are due June 28 or June 29. The thing about our taxes are that they are paid for periods rhetroactively. For instance, the taxes we pay this year are for periods of time for 2005-2006. They do not follow a calendar year. The reason I tell you this is the if you are offering to purchase a house make sure you indicate you will pay taxes for the period of time you own the property and the seller will pay for all periods they owned. This is called "proration". Lazy realtors will say the you can just pick up the taxes for the next period they are due (Nov. 2007) but you would be paying taxes for a period the the previous owner should be paying.

There two exemptions. First is the mortgage exemption which save you about $1,200 per year on you assessed value. The second is the homestead

exemption. Everyone is allowed one of these in Indiana so if you own a second home here you can only have one. This is the way they back door the way the legislature says they are saving you taxes. The exemtion saves a proportionate amount of tax and is somewhat of little value but a tax savings none the less. You must file for the homestead only once and should be done immeditately upon purchase. Most lending institutions will do it for you but make sure you sign for it at the closing.

Finally, all mortgage companies will escrow your taxes for you. When you apply for your mortgage make sure the lending institution credits you interest on the escrow account. A few do not and if your taxes are high then you are in essences losing all that interest. Just make sure to ask the question.

A question you did not ask but I will answer for you is the rate of taxes. I cannot give you the actual amount but might suggest you ask the question when you are negotiating. We are going through a terrible time now trying to change the manner is which we assess our taxes. The two areas you mention are two of the areas that the general consensous is that taxes are raising proportionately higher than some other areas immediately adjacent to yours. You might check the Carmel area, where I live. While are homes are a bit expensive you are in a buyers market. Our local tax rate here though is significantly lower than Fishers and Indy. JDH

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Source: en.allexperts.com

Category: Credit

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