- June 13, 2013
- All Indiana Issuing Offices
- UNDERWRITING - Retroactive Assessments for Erroneously or Fraudulently Filed Homestead Deductions
The Homestead Deduction reduces the taxable assessed value of real property for a statutorily fixed amount. Indiana code 6-1.1-12. In 2009, the legislature enacted House Enrolled Act 1344-2009 to address homestead fraud. The Act requires taxpayers who receive the homestead standard deduction to verify that they are eligible to receive the benefit and to provide additional identifying information (last five digits of social security number and driver’s license number) on a separate verification form and on any new application form. This information is used to populate a secure homestead database to be used by county auditors to track homestead filings statewide and prevent fraud. The verification form sent to taxpayers with their 2010-2012 tax bills was required to be completed January 1, 2013.
Indiana counties are actively reviewing their records and the homestead database for erroneous or fraudulent homestead deductions. Under Indiana Code 6-1.1-9-4, county assessors are authorized to retroactively assess property up to three years after the date an assessment is due. We have become aware of numerous instances in which a purchaser is being assessed for prior year’s taxes in their tax bills because the county determined the seller in the transaction was ineligible for the homestead deduction on the property. We have received information that counties are recognizing an exception for a bona fide purchaser. For these reasons, the following exception should be used in Schedule B in all residential commitments and policies:
The Company assumes no liability for the accuracy of the amount of any exemptions affecting the property or the value of the land and improvements as shown herein. The property owner/purchaser is responsible for filing any property exemptions, credits or deductions.
This commitment/policy does not insure against any loss or damage arising out of subsequent assessments or taxes and any penalties and interest, due to any change in the land usage or loss of exemption.
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