By Definition: What is the difference between Market Value In-Use and Market Value?

Indiana’s system of market value-in-use was established based on legislative changes that went into effect in 2002. This new system replaced the old assessment practice of only reassessing every 10 years. Annual adjustment or “trending” is now performed each year in order to try to keep property values consistent with what the local real estate markets will sustain. But what is the difference between what Indiana considers market value in-use and actual market value and how do they relate?

Let’s start first with Market Value since that is what most people are familiar with. Market value is generally accepted to be the most probable price which a property would bring in a sale between a willing buyer and seller under arms-length conditions, in an open market with adequate market exposure and reasonable marketing time. Market value, or MV as we will refer to it from now on, is sometimes considered a properties value in exchange. In simplest terms, how much is someone willing to spend to acquire the property. If you list your apartment building on the market for 120 days, asking $2,000,000, receive a few offers in that time frame, and eventually sell for $1,800,000, that final value would be the MV.

Market value in-use (MVIU) is slightly different in definition but, at least in Indiana, very similar in application. MVIU is the value for a specific property for a specific use. In other words, it is the value of the property based on its utility to its current owner or similar owner for its particular use. The MVIU could be considered the price that would induce the owner to sell and the buyer to buy a property and continue using it at its current use. If we’re talking about a residential property, the MVIU should be reflective of the fact that it is a property someone lives at rather than a commercial location for example. In another example, lets say you own an office building that you then sell in an arms-length transaction and it continues to be used as an office building afterward. In this case, the sales value would be indicative of the MVIU as well as the MV.

In markets where sales do not represent the utility to the owner, the MVIU will not be equal to the MV. As an example, in the case of special use properties, the utility to its owner may sometimes be higher than their sales price. Another case would be a market where owners are motivated by non-market factors. Take an operational farm at the edge of urban sprawl and commercial development, for example. The market would call for more commercial development here rather than farming and thus, a higher market value of the land. However, agricultural land is traditionally valued very low from an assessment standpoint and should continue to be as long as it remains agricultural in nature.

If all of this sounds confusing, you are probably in the majority. Innovative Property Tax Solutions is a full service property tax consulting firm that specializes in navigating this confusion for you. Our team of expert Level III Certified Assessor/Appraisers have many years of experience and training with property assessment analysis and appeal representation.

If you aren’t sure if your property is at the correct market value in use, give us a call today and speak to one of our experts. 219-472-8682.

Tax abatement a sweet deal – Chas Reilly – The Times

HOBART — Tax abatement has been finalized in association with Albanese Confectionery Group’s latest production expansion.

Albanese is investing about $60 million in manufacturing equipment for gummies and chocolate, and the company plans to begin the operations expansion project “almost immediately” now that the City Council has completed the traditional 10-year personal property tax abatement request, Mayor Brian Snedecor said.

Read More…

South Bend Common Council awards growing businesses property tax breaks – Jeff Parrott – South Bend Tribune

SOUTH BEND — The South Bend Common Council unanimously approved property tax breaks for six business development projects Monday night, including two that especially signal a strong local economy, a city administration staffer told the council.

The real and personal property tax abatements, combined, will give the businesses more than $7.6 million in tax discounts in exchange for creating 62 new jobs, or $123,161 of tax reduction per new job.

Read More…

Bill would reverse court ruling defining tax – Niki Kelly – The Journal Gazette

INDIANAPOLIS – A House panel approved a bill Monday that would reverse a court ruling on what constitutes a tax in Indiana.

Lawmakers are trying to undo an Indiana Tax Court ruling that could have profound negative impacts on local government finance around the state.

But even some of the legislators in support of the measure disagree with the basis of the bill – a user fee versus a tax.

Rep. John Young, R-Franklin, said he isn’t sure the case “is going to turn everything on its head” but that it puts the legislature in a tough position.

He added that you can call them fees all you want but “I don’t know why a stormwater fee that you can’t opt out of isn’t a property tax.”

Read More…

By Definition: What is this “trending” thing I keep hearing about on my property?

In Indiana, property owners all pay property taxes twice a year, once in May and again in November. The tax amount owed is a result of two things, the tax rate and the assessed value. Many times the question comes up as to why the assessed value of the property changes every year, regardless of whether there is a change made to the property. This occurrence is referred to as an annually adjusted property value or trended value. But what exactly does that mean? Let’s start with a little background.

In 1999, the Indiana Supreme Court ruled that the previous system that involved reassessing properties every 10 years was unconstitutional. This ruling forced the State legislature to devise an assessment plan that better reflected a market relatable values. Indiana lagged behind most of the country at this point, since almost all 50 states had already changed their assessment systems to reflect local market conditions. In 2002, the state began shifting their process and moved to what is known as a market value in-use system of assessment.

To accomplish this task, assessors implement annual adjustments or trending within each taxing district throughout the state. This involves calculating differences between the prior year assessment of a property and current or more recent sales data from similar properties. In the case of residential properties, sales of like homes within similar neighborhoods are collected and analyzed. For commercial or industrial properties, market data is compiled for property types within each class to make a determination. Once the difference is determined, either positive or negative, a factor is created so the assessor can adjust values closer to what the market value-in-use would reflect.

The ultimate goal here is to eliminate the large, lump sum “catch-up” adjustments that occurred under the old system of 10 year assessments. Because property values consistently rise and fall over time, trending is designed to make value determinations appear more realistic. As a result, taxpayers may see a concurrent rise or fall in their assessments from year to year. Or, sometimes the may even see no change at all.

How do you know your assessment is correct?

Your assessment should be reflective of what a willing buyer would pay for the property at the time of assessment. For instance, for 2019, the assessment date is January 1, 2019. If your 2019 assessment is accurate, it should represent approximately what your property could have sold for on or near January 1, 2019. If your assessment is inaccurate, the value will be something other than what normal market conditions will dictate at that time.

Innovative Property Tax Solutions can help make that determination for you and represent you throughout the process of having incorrect values corrected. Our team of Level III Certified Assessor/Appraisers have many years of experience and training in market analysis, cost reconstruction, and income based assessment analysis. We make sure your assessments are correct and accurately reflect market value, ensuring you are only paying your fair share in taxes and nothing more.

Give us a call today at 219-472-8682 and speak with one of our experts.

7th Circuit case highlights confusion over online home value ‘Zestimates’ – Olivia Covington – Indiana Lawyer.com

Buying a home is an exciting process, but it can also be confusing. Navigating the world of competing offers, title transfers and appraisals can be difficult, especially when buyers and sellers don’t use real estate agents to facilitate the process.

To ease some of that burden, real estate website Zillow offers a tool known as a home value “Zestimate.” Using public data, Zestimates, as the name implies, provide an estimate of how much a home is worth. That amount is listed on a home’s Zillow profile alongside the seller’s asking price, allowing buyers to compare the two.

Read More…

Why you’ll likely pay more in property taxes this year – Mary Milz – WTHR.com

INDIANAPOLIS (WTHR) — If you own a home, you’ll soon be getting your property tax bill. Just a head’s up: When you open up your bill you may get hit with a bit of “sticker shock.”

According to the Marion County Treasurer’s Office, 86 percent of homeowners will pay more in property taxes than they did last year. How much more? It depends on several things, including where you live. But bottom line? Deputy Treasurer Joshua Peters said Marion County homeowners are looking at an average increase of roughly eight percent.

“Property values continue to rise as the real estate market continued to do better,” Peters said. That makes for a bigger bill for homeowners.

Read More…

$90 million Eli Lilly investment could lead to property tax break – Eric Feldman – WishTV.com

INDIANAPOLIS (WISH) — Eli Lilly and Co. is developing a $90 million building as part of its efforts to fight diabetes and help people with it. 

What has drawn some questions is whether the global pharmaceutical company should get nearly $10 million in tax breaks from the city. 

On Monday night, a City-County Council committee passed the tax break, and it will be up for a vote at the next full council meeting. 

Read More…

Merrillville community center could be partially funded by $14.9 million bond – Chas Reilly – KokomoPerspective.com

MERRILLVILLE — The estimated cost to construct a new community center hasn’t been determined, but town officials have been discussing a potential bond issue to help fund the development.

Recent discussions have involved pursuing a tax increment financing district bond of $14.9 million.

Town Council President Richard Hardaway said Merrillville hasn’t finalized the amount of the potential bond because town leaders are waiting for a final cost estimate for the construction of the center that will be located on land Merrillville has acquired in the 6600 block of Broadway.

Read More…