Having delinquent property taxes in Indiana can result in a tax sale.
When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A "lien" is a claim against your property to ensure you'll pay the debt. It effectively makes the property collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
So, if your property taxes in Indiana are delinquent, your home can be sold at a tax sale to pay off the tax bill. But the winning bidder from the sale normally can't get ownership of your home right away. You'll usually get some time to get caught up on the overdue amounts before that happens.
However, If you don't pay off the debt during what's called a "redemption period" after the sale, you'll lose the property permanently.
How Do Property Taxes Work?
People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
When Are Property Taxes Due in Indiana?
Indiana property taxes are due twice a year, in May and November.
What Are the Consequences of Not Being Able to Pay Taxes in Indiana?
A property is eligible to be sold at a tax sale when the prior year's spring installment of property taxes remains unpaid. (Ind. Code § 6-1.1-24-1).
How Indiana Property Tax Sales Work
To sell your home at a tax sale, the county auditor and treasurer must ask a court for a judgment. (Ind. Code § 6-1.1-24-2).
The court will order a sale, and the treasurer will sell your home at a public auction to the highest bidder, subject to your right of redemption (see below). (Ind. Code § 6-1.1-24-5).
Indiana Tax Sale Procedures
At the tax sale, the winning bid generally must be at least the amount of the:
- delinquent taxes and special assessments
- taxes and special assessments due and payable the year of the sale
- penalties, and
- costs. (Ind. Code § 6-1.1-24-5).
Certificate of Sale
The high bidder, or the county or town if no one makes a minimum bid, then gets a certificate of sale. (Ind. Code § 6-1.1-24-9). This certificate doesn't convey ownership of the property to the purchaser. Ownership is conveyed through a tax deed after the redemption period expires.
Notice Before a Tax Sale in Indiana
The auditor must mail you a notice by certified mail and regular mail at least 21 days before the earliest date on which the application for judgment and order for sale of real property eligible for sale may be made. The auditor must also post a copy of the notice at the county courthouse, or in another public county building, and publish the notice in a newspaper for three weeks. (Ind. Code § 6-1.1-24-4, § 6-1.1-24-3).
But these requirements don't apply to property that's considered vacant or abandoned real property under Indiana law. (Ind. Code § 6-1.1-24-4, § 6-1.1-24-3).
Redeeming Your Home After a Property Tax Sale
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.
How the Right to Redeem Usually Works
In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.
In other states, though, the redemption period happens before the sale.
Can I Get My Home Back After an Indiana Tax Sale?
Generally, people who lose their home to a tax sale in Indiana have two options to get the property back: Redeeming it or, in rare cases, setting aside (overturning) the sale.
How Long Is the Redemption Period After an Indiana Tax Sale?
Generally, in Indiana, the homeowner gets one year to pay the redemption amount and reclaim the property following a tax sale. (Ind. Code § 6-1.1-25-4).
In some cases, though, the redemption period is 120 days, including when:
- the county acquires a lien for which the certificate of sale isn't sold (120 days after lien acquisition) or is sold (120 days after the sale of the certificate)
- the county assigns the certificate to a political subdivision, or
- if an eligible urban homesteading program gets the certificate. (Ind. Code § 6-1.1-24-9, 6-1.1-25-4).
Getting an Extended Redemption Period
If the property doesn't sell at a tax sale, and the treasurer and owner agree before the expiration of the 120-day redemption period for payment of the entire amount within one year of the agreement, then the treasurer may extend the redemption period to one year after the agreement date.
But if the homeowner doesn't comply with the agreement, the treasurer may terminate the agreement after giving 30 days written notice to the owner, and the extended redemption period then expires 30 days after the notice date. (Ind. Code § 6-1.1-25-4).
No Right to Redeem for Abandoned Homes
You can't redeem the property if the home is considered vacant and abandoned under Indiana law and is included on the list of such properties that the county auditor prepares. (Ind. Code § 6-1.1-25-4).
Notice About the Right to Redeem Your Indiana Home
No later than 90 days after the sale, the person who bought your home at the sale must send you a notice about your right to redeem the property. (Ind. Code § 6-1.1-25-4.5).
How Much You'll Have to Pay to Redeem Your Indiana Home
To redeem your home after a tax sale from a purchaser who bought your home at the sale, you'll likely have to pay:
- 110% of the minimum bid required at the auction, which includes taxes, penalties, and costs, if you're redeeming the property within six months after the sale date
- 115% of the minimum bid amount if redeeming the property more than six months, but not more than one year, after the sale date
- 5% per year on the amount of the purchase price that exceeds the minimum bid amount
- all taxes and special assessments the purchaser paid
- 5% per year on any taxes or special assessments that the purchaser paid
- all additional taxes, special assessments, interest, penalties, and fees on the property that accrued and are delinquent after the sale
- all taxes or special assessments, or both, that accrued and are delinquent after the sale or were paid by the county treasurer, and
- costs. (Ind. Code § 6-1.1-25-2).
What Usually Happens If You Don't Redeem
If the real property isn't redeemed during the redemption period, the purchaser can apply to the court to get a tax deed (title) to your home. (Ind. Code § 6-1.1-24-9).
Setting Aside a Completed Tax Sale
In some rare situations, like if the tax lien or tax sale process has defects, the taxes were paid or not owed, or excusable neglect, you might be able to invalidate a completed tax sale. The reasons that justify, as well as the procedures for, invalidating a tax sale are complicated.
If you lose your home to a tax sale and want to learn more about setting the sale aside, talk with a qualified lawyer as soon as possible.
What Options Do I Have If I Cannot Afford to Pay My Property Taxes in Indiana?
Even though you'll probably get a redemption period after an Indiana tax sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable. You could, for example:
- find out if you meet the criteria for a property tax abatement, or
- request a change in the property's assessment if you feel your assessed property value isn't reflective of the fair market value.
Getting Help
If you're already facing a property tax sale in Indiana and have questions (or need help redeeming your property), consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.
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