General real estate taxes are the taxes levied on real estate by various governmental agencies and municipalities (e.g., states, counties, cities, school districts, etc.) to fund the operations of the agency. They are “ad valorem” taxes, which means that they are based on the value of the property being taxed.
Real estate is valued for tax purposes by county or township assessors. The valuation process is called “assessment,” and the property’s assessed value is generally based on the sales price of comparable properties. Property owners who feel that their assessment is too high relative to other properties may appeal to a local board of appeal. If an agreement can not be reached, the case could ultimately go to court.
Tax rates are determined by each taxing body separately. They project operating expenses for the coming year and divide the monies needed by the total assessments within their jurisdiction. A property owner’s tax bill is determined by multiplying their assessed value by the tax rate.
Due dates for tax payments are set by statute. Taxes are payable in two installments annually. If you fail to pay your taxes on time, you will be assessed a penalty.
Property taxes in the state of Indiana are paid in May and November of each year. These taxes are a year in arrears, meaning that the tax bill due in May is for the first half of the preceding year, and the November installment is for the second half of the preceding year. If a buyer were closing on April 15, the seller would be crediting to the buyer all of the taxes for the previous year and 3 1/2 months of the current year. This crediting process is called “proration.” Once the seller credits the prorated taxes to the buyer at closing, the buyer then assumes and pays all tax bills going forward.