The annual exercise of filing real and personal property tax exemption applications is once again upon Indiana taxpayers, as the April 1 deadline for these applications draws near. If an application is required and not filed, an eligible taxpayer risks waiving the exemption — and thereby being held liable for payment of tax on the property for the following year.
Not every taxpayer has to submit an exemption application every year. Once certain exemptions are granted, they “roll forward” and apply to the property until there is a material change in the physical status or use of the exempt property. Taxpayers — even recognized nonprofit organizations — should not automatically assume that their land and improvements are exempt, regardless of whether exemptions have applied to those properties in the past. Performing due diligence on exemptions and ensuring the timely filing of property tax exemption applications can help you avoid becoming a cautionary tale.
Is Your Property Exempt?
Indiana offers an array of exemption opportunities for property owners. Potential exemptions include (but are not limited to) the following:
- Property that is owned and exclusively or predominantly used and occupied for educational, literary, scientific, religious or charitable purposes.
- Property owned by an Indiana nonprofit corporation which is organized and operated for the primary purpose of coordinating, promoting, encouraging, housing or providing financial support to activities in the field of fine arts.
- Property leased to a State of Indiana agency (if the agency is responsible for the associated property tax).
- Property used for worship, as a parsonage, or which is owned by a church and used as a dormitory for students attending an in-state university or college.
- Property owned by sororities and fraternities and used for their purposes, including for use as a local, state or national headquarters or for administrative support.
- Property leased to Indiana state educational institutions.
- Property leased to political subdivisions.
These are general descriptions of the exemptions. Each exemption statute has its own specific requirements that must be met for property to qualify under it. A taxpayer should pay careful attention to the requirements to determine whether its property qualifies for exemption, to what degree the property may qualify, and whether an application is due by April 1, 2020.
Failure to Timely File: A Costly Clerical Error
A recent case demonstrates how the failure to timely file an application can leave property owners without recourse until the next tax season. A Masonic Lodge felt the sting of a lost exemption when the Indiana Board of Tax Review denied its exemption application for the January 1, 2018, assessment date (for taxes payable in 2019). In Lafayette Masonic Lodge 123 v. Tippecanoe County Assessor (Jan. 20, 2020), the Lodge sought an educational and charitable purposes exemption for a previously taxable, vacant lot that it had acquired and upon which it intended to build. The facts were undisputed: the Lodge bought the vacant lot in November 2017 but only filed for exemption on June 11, 2018 — more than two months after the April 1 filing deadline. The Board held that it was powerless to correct the late filing. The Board explained: “Indiana statutes provide the general rule that if a property owner does not comply with the procedures for obtaining an exemption, the exemption is waived. If the exemption is waived, the property is subject to taxation … Exemption applications must be filed by April 1 of the assessment year.” (emphasis added).
In this situation, the Board lacked authority to grant the requested exemption or reduce the tax liability. Consequently, the property was fully taxable for the 2018-pay-2019 assessment. (An exemption was applied for the following year.)