Beginning January 1, 2023, Indiana home and property owners will no longer be able to claim the mortgage deduction on their annual property taxes. This comes in part of the HEA 1260 repeal of IC 6-1.1-12-1, 2, 3, 4, 5, 6, and 7.
Previously, residents of Indiana who purchased property on a recorded mortgage or contract could qualify for the mortgage deduction on their property tax bills. For mortgages that were recorded prior to December 31, 2022, residents will still be able to apply for the mortgage deduction on taxes payable in 2023, however, the deduction will no longer apply in 2024 and beyond. The mortgage deduction amount is currently either one-half of the property’s assessed value or $3,000, whichever is less.
To offset the elimination of the mortgage deduction, the homestead deduction amount is being increased. Indiana hasn’t released the amount at the time of this writing, but the current amount is either 60% of your property’s assessed value or a maximum of $45,000, whichever is less.
To receive the homestead deduction, you must file an application with your County’s Auditor’s Office by December 31. Applications completed by December 31 will then be reflected on next year’s tax bill. For example. If you were to file a homestead deduction by December 31, 2022, this would be reflected on your 2023 tax bill.
Again, Indiana homeowners will be able to file a mortgage deduction until December 31, 2022. The standard homestead amount will be increased to offset the loss of the mortgage deduction. If you have any questions regarding these developments, please contact your local County Auditor’s office or a member of the Metropolitan Title team.