By VICKI URBANIK

Many Porter County homeowners might be surprised to learn that they will not qualify for one of the most significant components of Indiana’s new property tax law.

The tax caps that state lawmakers approved as part of H.E.A. 1001 will cap property taxes based on a property’s assessed value. On tax bills next year, the caps will be set at 1.5 percent of the assessed value for homes; 2.5 percent for rental properties, apartments, agricultural lands, land under mobile homes, and long-term care facilities; and 3.5 percent for all other real and personal property, including businesses and industry.

Then, beginning in 2010, the caps will be lowered to a 1-2-3 percent formula, with a 1 percent cap for homeowners up to 3 percent for businesses.

Who will qualify?

In a nutshell, the higher the assessment, the more likely it is that the property owner will see their tax bills cut by the cap. Owners of more modest homes will get less of a break, if they benefit at all.

A Chesterton Tribune semi-random search of more than 100 Porter County tax bills for homes throughout the county showed that 60 percent of homeowners currently pay more than 1 percent of their assessed value in property taxes already, while 40 percent do not.

While it’s impossible to know what the tax rates and other components of tax bills will be in 2010, it’s probable that those homeowners who wouldn’t qualify for the 1 percent cap now won’t qualify for it in two years either, to other tax-cut provisions in the new law.

With a tax cap of 1.5 percent in 2009, significantly fewer Porter County homeowners will benefit. Of the 110 homesteads in the Tribune’s search, only 4.5 percent currently pay more than 1.5 percent of their assessed value in property taxes. Just over 95 percent do not and will not qualify for the tax cap next year.

However, homeowners can be rest assured that their property taxes will go down this year -- not because of the tax cap, but because of other provisions in H.E.A. 1001, namely:

•A new, supplemental homestead deduction of $35,000 in addition to the standard deduction of $45,000;

•An increase in the state homestead credit this year, followed by a new, though temporary, state homestead credit in 2009 and ‘10.

•The state’s takeover of certain expenses now paid through property taxes; the most significant one is the state’s takeover of the school operating fund levies, which usually represent the single largest portion of one’s property tax. (For example, the tax rate to fund the Duneland Schools’ general fund was 28 percent of the total rate in Chesterton for the most recent tax bills).

Though it may be impossible to predict the impact of the higher homestead credits, homeowners can get a pretty good idea of how they’ll be helped by the new homestead deduction and the state takeover of school operating costs and child welfare services. A Chesterton homeowner with a $200,000 assessed home paid just over $2,600 in property taxes last year. Using all the same rates that were in place on the 2007 tax bills -- which of course will differ on 2008 bills -- that same homeowner can expect to save about $380 just from the higher deduction and the removal of the school and child services levies, not including the additional savings from the higher homestead credit.

Tax Caps

The tax caps statewide will result in lost revenue for taxing units. The fact that many Porter County homeowners won’t be helped directly by the tax cap in 2010, and even fewer in 2009, is reflected in the forecasts of lost revenues.

Overall, Porter County taxing units are projected to lose $1.3 million from the caps next year, with the loss climbing to $9.6 million in 2010.

The taxing units projected to lose the most in 2010 are, in order, the city of Valparaiso (a loss of $1.8 million), county government ($1.6 million), Portage city ($1.6 million), Valparaiso Schools ($1.5 million), and the Portage schools ($1.3 million).

The situation is far different in Lake County, which is projected to lose much more revenue due to the tax caps. The city of Gary, for example, is projected to lose $36.7 million in 2009 and $45.5 million the following year, while the Gary Schools are projected to lost $11.7 million in 2009 and $14.6 million the following year.

To qualify for the 1 percent tax cap in Porter County, the search of random home tax bills showed that, generally speaking, the 1 percent tax cap would apply to homes assessed at roughly $120,000 or more in the cities and towns and those assessed at roughly $170,000 or more in the unincorporated areas. With some exceptions, the bills for homes assessed under those levels are already below the 1 percent cap.

Some actual examples of Porter County homes that likely won’t qualify for the 1 percent cap, based on the tax bills in 2007:

Porter home assessed at $62,400: Tax bill of $494.

Kouts home assessed at $90,300: Tax bill of $316.

Town of Pines home assessed at $99,700: Tax bill of $607.

Westchester Township home assessed at $128,700: Tax bill of $1,061.

Jackson Township home assessed at $183,800: Tax bill of $1,749.

Liberty Township home assessed at $118,600: Tax bill of $941.

Some actual examples of Porter County homes that will likely benefit by the 1 percent cap in 2010, again based on their 2007 tax bills:

Chesterton home assessed at $134,700: Tax bill of $1,457 would be cut to no more than $1,347.

Valparaiso home assessed at $305,000: Tax bill of $5,682 would be cut to no more than $3,050.

Portage home assessed at $107,800: Tax bill of $1,274 would be cut to no more than $1,078.

Porter home assessed at $177,800: Tax bill of $2,478 would be cut to more than $1,778.

Posted 3/20/2008