@Frank Sousa Indianapolis is not like CA where they reassess the property based on the sales price at transfer of title. They reassess every 2 years based on what market values in the area are at the time. Unless you've increased the footprint of the house or increased the number of rooms, a renovation is not generally going to increase you assessed value. The tax assessor doesn't look at whether the property got a new roof, HVAC, kitchen cabinets etc which is what most rehabs consist of. They are going to base it on what overall values are at the time of re assessment.
I'm also interested to learn more about this. Thanks for your answer @Mike D'Arrigo .
Primary Residences = 1% tax rate
Other Residential Properties (rentals, apartments, vacation homes) = 2% tax rate
All Commercial Properties (retail, industrial, office) =3% tax rate
Therefore, the amount you see on the property record card, multiply that number by 2% and you should have a very good estimate on what the tax is (or will be once corrected). Indiana IS NOT ASSESSED BY TRUE MARKET VALUE, but rather "market value-in-use" which essentially means "what would another similar user pay for the same utility of the property?"
Therefore, while a property may be worth $100,000 on the open market, a similar investor may only pay $80,000 to achieve the same gross rent multiplier, therefore the property is assessed at $80,000. @Mike D'Arrigo had it somewhat correct in that Indiana does not reassess every year, but rather every four (4) years. One of Indiana's four (4) assessment districts receives a "trending" factor each year, pushing it in the general direction of the market, paired with a formal reassessment and full-blown adjustment of its value every four.
I formally negotiated commercial property assessment appeals for large student housing facilities and industrial projects. Indiana is its own monster!
Happy to chat more should you have any questions.
thank you @Mike D'Arrigo @Evan Manship I have used the property cards you referenced and the property I have targeted and put an offer on has a very low assessed value $17,500. Being from California, and being accustomed to having the taxes re-assessed at the time of purchase at the amount of the sales price, I got sticker shock at what this investment property would be re-assessed at.
The target property in question appears to have been fully renovated in 2014, so perhaps it will be re-assessed soon? Could be the seller's reason for selling now? I'm just worried that my analysis using the current tax rate makes it look like a "no brainer" acquisition. But if the taxes go up 10x I can't make it work and that is what makes me nervous, especially with this being my first out of state purchase.