For years the system that Indiana assessors have used to apply your homestead deduction has been a nightmare.  Even in a best case scenario where a buyer buys a property from a seller who used it as their primary residence, the Homestead Deduction credit would lapse for one year if the purchase was not complete by March 1.  Another hurdle was the June 5th filing deadline where again if that deadline was missed, the deduction credit could lapse.  In the worst case where no Homestead Credit existed due to the property being a rental or lapsed because the homeowner moved and purchased a new home thereby making it the new primary residence, the lapse could be up to two years.  The problem arises when this lapse in the Homestead Deduction causes the property taxes for that property to increase; sometimes substantially.  If you escrow your taxes as part of your monthly house payment, this can cause the payment to go up as much as several hundred dollars for the period in which you are not eligible for the Homestead Deduction.  While the problem is temporary, it can make it difficult if not impossible to choose one home over another.  Your payment can be very different on two homes that are otherwise identical if one has a Homestead Deduction and the other doesn't.  Imagine you are relocated because of your job.  You get to your new destination and buy your home.  Meanwhile you are making two mortgage payments and to add insult to injury, you loose your Homestead Deduction because you have purchased a new primary residence.  It could put you in a position to have to lower the price of your home to compensate for the lack of a Homestead Deduction in order to be competitive with homes for sale that don't have this problem.

Well thanks to Mr. Phil GiaQuinta, this problem has been addressed and in all be the worst case, solved.  And where the worst case is concerned, the lapse is not nearly as painful as it was under the old system.  Mr. GiaQuinta, in the last legislative session that ended March 14 authored HB 1293 which passed the House and Senate and Governor Daniels signed into law.  Mark Brown, who is the Director of Policy and Research for the Indiana Association of REALTORS summarized the new law this way:

With regard to the homestead deduction/credit, there are two changes that matter. 

First, the deadline for filing for benefits for “next year” has been extended to Dec 31.  If one purchases a home and files for homestead by Dec 31 of the same year, they receive full benefit on tax bills payable in May and November of the next year.  Example:  Homeowner purchases home anytime in 2008.  Homestead paperwork filed by Dec 31, 2008 means that homeowner receives homestead benefit in May and Nov 2009.

Second, if a home is currently receiving the benefit of the homestead and a person - who will become a homesteader and live in the home - purchases that home during a year, they will receive the homestead benefit for the remainder of that year (they still need to file the paperwork by the end of that year or the benefit will be lost for the following year).  Example:  homeowner receiving homestead sells home in 2008 to new homeowner.  New homeowner receives homestead benefit for taxes payable in May and Nov 2008.  New homeowner must file paperwork by Dec 31 2008 to receive benefit in May and Nov 2009.

Unfortunately, if a person who will live in the home purchases it during a year and the home was a rental, they will not receive the homestead benefit until the next year (they have until Dec 31 to file the paperwork to receive the benefit for next year).  Example:  Homeowner purchases home that was rental and did not qualify for homestead.  Home purchased before May tax bill due (Jan – Apr 2008).  New homeowner does not receive homestead benefit on May and Nov 2008 tax bills.  Homeowner files homestead paperwork by Dec 31, 2008 will receive homestead benefit in May and Nov 2009.

In my opinion, Phil GiaQuinta has solved a major issue faced by REALTORS and property owners for a long time and I along with many of the REALTORS and property owners that I have talked to offer our thanks.  Keep up the good work Phil!