Mr. Heaney testified without contradiction that he and his wife used the subject property as their principle residence on March 1, 2008. A significant portion of the subject property therefore met the definition of a homestead that was eligible for the standard deduction and consequently qualified for the homestead tax cap under Indiana Code § 6-1.1-20.6-7(a)(1). Of course, Mr. Heaney did not apply for the standard deduction. And the Assessor rests her entire defense on that fact. According to the Assessor, a taxpayer must apply for the standard deduction in order to get the homestead tax cap because the auditor would otherwise have no way of knowing whether a property meets the statutory definition of a homestead, i.e. whether the taxpayer uses the property as his primary residence.
But a homestead under the tax
cap statute is simply a homestead that is “eligible” for the standard
deduction, not a homestead that is the subject of an application for, or that
has been granted the standard deduction. The fact that the Heaneys did not take
advantage of their property’s eligibility for the standard deduction by applying
for that deduction is beside the point.
The Board sympathizes with the
Assessor’s position to an extent. Not all residential properties are entitled
to the homestead tax cap—only those used as a taxpayer’s principle residence
are. And a county auditor has no way of knowing whether a taxpayer uses a given
property for his principle residence unless the taxpayer affirmatively shows
that fact, such as when the taxpayer applies for a standard deduction. Thus, a
homeowner’s failure to apply for a standard deduction can lead to an auditor
erroneously failing to apply the homestead tax cap in the first instance. But
when a taxpayer brings that error to the auditor’s attention, as Mr. Heaney did
in this case, the auditor can and must correct that error.
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