Short answerIndiana property taxes are paid a year behind, so at closing the seller usually credits the buyer for taxes that built up during the seller's ownership. Homestead property tax is capped at 1% of gross assessed value. Deductions changed under a 2025 law, with a new supplemental homestead credit starting in 2026. File for your homestead deduction after you buy.
Why are taxes paid a year behind?
Indiana bills property taxes in arrears. The bills paid this year, usually in May and November, are for last year's assessment. That is why the closing statement includes a tax proration. The title company calculates it from current bills.
What is the 1% cap?
The Indiana Constitution caps property tax on a homestead at 1% of its gross assessed value. Other residential property and farmland are capped at 2%, and other property at 3%.
What changed in 2025 and 2026?
Senate Enrolled Act 1 (2025) began phasing out the standard homestead deduction over several years, increased the supplemental deduction, and added a supplemental homestead credit starting with 2026 taxes, equal to 10% of the bill up to $300. Your county auditor can show the effect on a specific property.
If you are selling
Expect a tax proration on your settlement statement, often around a year of taxes. Seller closing costs.
If you are buying
The deductions belong to the owner who files. Make sure your homestead deduction is filed for your new home; your title company or county auditor can explain how. Budget taxes with the 1% cap as a ceiling. Monthly cost calculator.
Frequently asked questions
Do I lose the seller's homestead deduction when I buy?
The new owner usually needs to file their own. Ask the title company or county auditor.
Can my property tax be more than 1% of my home's value?
For a homestead, the cap is 1% of gross assessed value, but voter approved referendums can add to bills in some areas.
Keep reading
Want to know what a buyer's inspector may find before they do?
Book a free pre listing condition walk. I walk the house with you, point out what inspectors and FHA, VA, and USDA appraisers tend to flag, and give you planning ranges so you can decide what to fix, credit, price in, or disclose.
Book a condition walkOr call or text (812) 525-5489, or email [email protected].
The condition walk is a REALTOR® and contractor evaluation, not a home inspection, and it does not replace one. If you have already signed a listing agreement with another agent, please take these questions to your agent.
Looking at a house and not sure what you are getting into?
Ask for a free Before You Offer review. Send me the listing. I look over the photos, the seller's disclosure, and recent sales, then flag likely condition issues and planning cost ranges before you write an offer.
Request a Before You Offer reviewOr call or text (812) 525-5489, or email [email protected].
The Before You Offer review is a REALTOR® and contractor review of the listing, not a home inspection. It is for buyers who are not already working with an agent. If you have an agent, please bring these questions to your agent.
Sources
- Indiana Constitution Article X, Section 1 (circuit breaker caps)
- Senate Enrolled Act 1 (2025) property tax changes, summaries by AIM and Baker Tilly
- Indiana Department of Local Government Finance
Written by John Long, REALTOR®, 1 Percent Lists Indiana Real Estate. Working contractor who has priced hundreds of home inspection repair requests. Former labor relations negotiator for a major manufacturer and U.S. Coast Guard veteran.
John Long, REALTOR® · 1 Percent Lists Indiana Real Estate · (812) 525-5489 · yourpropertynegotiator.com
This page is general information, not a substitute for a professional home inspection, and not legal, tax, insurance, or lending advice. Ask a real estate attorney about contracts and disclosure, a CPA about taxes, your lender about loan rules, and a licensed inspector or tradesperson about your house. Nothing here guarantees a sale price, net proceeds, repair cost, payment, timeline, appraisal, inspection result, or loan approval. Cost figures are planning estimates, not bids. I own Wardmark Property Operations LLC, a contracting company. You are always free to use any contractor you choose.