Friday, September 27, 2013

Board Finds Petitioner's Property to be "Non-Residential Real Property" Subject to 3% Tax Rate

...

Indiana Code § 6-1.1-20.6 provides taxpayers with a credit for excessive property taxes. That credit is often called a “tax cap,” and it varies in amount depending on how a property is classified:

A person is entitled to a credit against the person’s property tax liability for property taxes first due and payable after 2009. The amount of the credit is the amount by which the person’s property tax liability attributable to the person’s:
(1) homestead exceeds one percent (1%);
(2) residential property exceeds two percent (2%);
(3) long term care property exceeds two percent (2%);
(4) agricultural land exceeds two percent (2%);
(5) nonresidential real property exceeds three percent (3%); or
(6) personal property exceeds three percent (3%);
of the gross assessed value of the property that is the basis for the determination of property taxes for that calendar year.

I.C. § 6-1.1-20.6-7.5(a).

b) For purposes of applying the tax cap statute, “residential property” and “nonresidential real property” do not necessarily carry their common meanings. Instead, they are specifically defined as follows:

“Residential property”

As used in this chapter, “residential property” refers to real property that consists of any of the following:
(1) A single family dwelling that is not part of a homestead and the land, not exceeding one (1) acre, on which the dwelling is located.
(2) Real property that consists of:
(A) a building that includes two (2) or more dwelling units;
(B) any common areas shared by dwelling units; and
(C) the land, not exceeding the area of the building footprint, on which the building is located.
(3) Land rented or leased for the placement of a manufactured home or mobile home, including any common areas shared by the manufactured homes or mobile homes.

I.C § 6-1.1-20.6-4

“Nonresidential real property”

(a) As used in this chapter, “nonresidential real property” refers to either of the following:
(1) Real property that:
(A) is not:
(i) a homestead; or
(ii) residential property; and
(B) consists of:
(i) a building or other land improvement; and
(ii) the land, not exceeding the area of the building footprint, on which the building or improvement is located.
(2) Undeveloped land in the amount of the remainder of:
(A) the area of a parcel; minus
(B) the area of the parcel that is part of:
(i) a homestead; or
(ii) residential property.
(b) The term does not include agricultural land.

I.C. § 6-1.1-20.6-2.5

c) The subject parcel does not qualify as residential property under the tax cap statute— it has no dwelling units and is not leased for placement of a manufactured or mobile home. But it does qualify as nonresidential real property because it is undeveloped land that is not agricultural land, part of a homestead, or residential property as defined by Ind. Code § 6-1.1-20.6-4. The Elkhart County Auditor therefore correctly applied a 3% cap.

Conclusion

7. Because the subject parcel is “nonresidential real property” under Ind. Code § 6-1.1-20.6-2.5(a)(2), the Elkhart County Auditor correctly applied a credit in the amount by which the parcel’s taxes exceeded 3% of its gross assessed value.