Tax Foreclosure in Indiana: What Homeowners Need to Know
A guide from AuctionBlock.org
If you own a home in Indiana and have fallen behind on your property taxes, your property could be sold at a tax sale. Indiana uses a tax lien sale system, where unpaid property taxes are sold to investors. If you do not redeem your property within the statutory period, the investor can receive a tax deed and take ownership. This guide explains the process step by step, your redemption rights under Indiana law, real exemption programs, and where to find help.
How Property Tax Collection Works in Indiana
Property taxes in Indiana are collected by the county treasurer. Tax payments are due in two installments: May 10 and November 10 of each year. If you do not pay by the due date, the county adds penalties. Under Indiana Code (IC) 6-1.1-37-10, a 10% penalty is added on the first day of delinquency, followed by an additional 10% penalty after the taxes have been delinquent for 30 days.
The statutes governing tax sales in Indiana are found in IC 6-1.1-24 (tax sale procedures) and IC 6-1.1-25 (redemption).
The Tax Sale Process
Indiana counties hold annual tax sales, typically in the fall. Here is how the process works:
1. Certification of Delinquency The county auditor certifies a list of properties with delinquent taxes. The county must provide written notice to the property owner at least 21 days before the sale, sent by certified mail (IC 6-1.1-24-4).
2. The Tax Sale At the annual tax sale, the county offers tax lien certificates on delinquent properties. Bidders compete by bidding the amount of delinquent taxes, penalties, interest, and costs. The bidding may also include overbids. The highest bidder wins the right to the tax lien certificate.
Under IC 6-1.1-24-2, if no one bids on a property, it is struck off to the county as a "county-held" certificate, and the county essentially holds the lien.
3. What the Buyer Receives The tax sale purchaser receives a certificate of sale. This gives them a lien on the property, not ownership. The homeowner retains the right to live in and use the property during the redemption period.
The Redemption Period
Indiana law provides a redemption period during which the homeowner can pay off the delinquent taxes and reclaim full rights to the property.
Standard Redemption Period: One Year Under IC 6-1.1-25-4, the property owner has one year from the date of the tax sale to redeem the property. To redeem, the owner must pay the county auditor the following: the amount paid by the tax sale purchaser, plus 10% of that amount if redeemed in the first six months, or 15% of that amount if redeemed in the second six months, plus any subsequent taxes paid by the purchaser, plus costs.
120-Day Redemption for Vacant or Abandoned Property Under IC 6-1.1-25-4.5, if the property is determined to be vacant or abandoned, the redemption period may be shortened to 120 days from the date of the sale. This shortened period is used primarily for properties that are clearly unoccupied and deteriorating.
After the Redemption Period If no one redeems the property, the tax sale purchaser may petition the court for a tax deed under IC 6-1.1-25-4.6. The purchaser must provide notice to the property owner before the petition is granted. Once the tax deed is issued, the former owner loses all rights to the property.
Exemption and Assistance Programs
Indiana offers several property tax deductions and credits that can reduce your tax burden.
Homestead Standard Deduction Under IC 6-1.1-12-37, homeowners who occupy their property as a primary residence may claim a homestead standard deduction. This deduction reduces the assessed value by up to 60% of the first $600,000 in assessed value (with a maximum deduction of $48,000 for most properties). You must file for this deduction with your county auditor.
Supplemental Homestead Deduction Under IC 6-1.1-12-37.5, an additional deduction is automatically applied to homestead properties. This deduction equals 35% of the assessed value remaining after the standard deduction (for the portion between $600,000 and $800,000) and 25% for assessed values above $800,000.
Over 65 Property Tax Deduction Under IC 6-1.1-12-9, homeowners age 65 or older with an assessed value of $240,000 or less and combined adjusted gross income of $40,000 or less may qualify for an additional deduction of up to $14,000 from the assessed value.
Disabled Veteran Property Tax Deduction Under IC 6-1.1-12-14, veterans with a total disability rating from the U.S. Department of Veterans Affairs may qualify for a property tax deduction of up to $24,960 from the assessed value of their homestead. Veterans with a 10% or greater service-connected disability may qualify for a partial deduction under IC 6-1.1-12-13.
Mortgage Deduction Under IC 6-1.1-12-1, homeowners with a mortgage on their primary residence may claim a deduction of up to $3,000 from assessed value.
Property Tax Cap (Circuit Breaker) Under IC 6-1.1-20.6, property taxes are capped at 1% of assessed value for homesteads, 2% for other residential and agricultural land, and 3% for commercial and industrial property. This cap is enshrined in the Indiana Constitution (Article 10, Section 1) and applies automatically.
Legal Aid and Assistance Organizations
If you are facing a tax sale in Indiana, these organizations can help:
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Indiana Legal Services -- Provides free civil legal assistance to low-income residents statewide. Offices in Indianapolis, Bloomington, Gary, South Bend, Evansville, New Albany, and other locations. Phone: 1-844-243-8570. Website: indianalegalservices.org
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Neighborhood Christian Legal Clinic -- Free legal services for low-income residents in central Indiana, including housing-related matters. Website: nclegalclinic.org
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Indiana Bar Foundation -- Operates pro bono programs connecting low-income residents with volunteer attorneys. Website: inbf.org
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Indiana Housing and Community Development Authority (IHCDA) -- Administers homeowner assistance programs and can connect you with HUD-approved housing counselors. Website: in.gov/ihcda
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HUD-Approved Housing Counseling Agencies -- Find approved counselors at hud.gov/findacounselor.
Emergency Action Steps
If your property taxes are delinquent or you have received notice of a tax sale in Indiana, take these steps:
1. Contact your county treasurer. Find out the exact amount owed, including penalties. Ask about payment arrangements before the tax sale.
2. File for your homestead deduction if you have not already. This deduction is not automatic -- you must apply through your county auditor. Missing this deduction means you may be paying more in property taxes than necessary.
3. Apply for additional deductions. If you are 65 or older, disabled, or a veteran, you may qualify for additional property tax deductions that reduce your bill.
4. Contact Indiana Legal Services. Call 1-844-243-8570 for free legal advice about your tax sale situation.
5. If your property has already been sold at a tax sale, know your one-year deadline. Calculate the redemption amount and begin working toward payment. Do not wait until the last minute.
6. Contact a HUD-approved housing counselor. A counselor can help you create a plan and identify financial resources.
7. Visit auctionblock.org/get-help. AuctionBlock.org is a mission-driven company dedicated to foreclosure prevention. We can connect you with resources in your county and help you understand your options.
Key Statutory References
- IC 6-1.1-24 -- Tax sale procedures
- IC 6-1.1-25-4 -- One-year redemption period
- IC 6-1.1-25-4.5 -- 120-day redemption for vacant/abandoned property
- IC 6-1.1-25-4.6 -- Tax deed petition
- IC 6-1.1-37-10 -- Penalties on delinquent taxes
- IC 6-1.1-12-37 -- Homestead standard deduction
- IC 6-1.1-12-9 -- Over 65 deduction
- IC 6-1.1-12-14 -- Disabled veteran deduction
- IC 6-1.1-20.6 -- Property tax caps
Legal Disclaimer
This guide is provided by AuctionBlock.org for educational purposes only. It does not constitute legal advice. Tax laws and local procedures vary by county and change over time. You should consult with a licensed attorney in Indiana for advice specific to your situation. AuctionBlock.org is a mission-driven company organization. We are not a law firm and do not provide legal representation. AuctionBlock.org is a newly established organization and has not yet served any families.
For help with tax foreclosure prevention, visit auctionblock.org/get-help.