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What Are the Penalties for Unpaid Property Tax in Indiana?

According to TaxFoundation.com, Indiana is ranked 35th in the nation for property taxes paid per capita, with the average property-tax owner paying $973 annually. Refusal or inability to pay property taxes can lead to penalties and auction sales of the owner's property, so meeting deadlines and understanding the appeals and auction process can help property owners stay above water.

Property Tax Deadlines and Penalties

In Indiana, property taxes are due in two installments each year, with deadlines of May 10 and Nov. 10. According to the Indiana Department of Local Government Finance, the county must send the property tax bill at least 15 days in advance of the deadline. If the payment deadline is not met, property owners will incur a penalty. If the payment is less than 30 days late, a 5 percent penalty is added; after 30 days, the penalty is increased to 10 percent of the total tax bill due. After one year of delinquency, the state assigns an additional 10 percent penalty, or 20 percent total, and the property becomes eligible for auction.

Property Auction

If penalties and unpaid property taxes are not paid within a year, the county may hold a property auction as part of a tax sale, with funds from the sale used for paying off the unpaid tax debt. The winning bidder of the auction will own a lien on the property, but he will not be in possession of the property unless the original property owner refuses to pay the amount of the bid plus an additional bidder penalty. If the original property owner does not pay the bid amount and penalty, the property will belong to the bidder, and the original owner will be forced to vacate the home.

Assessment Appeals and Unpaid Property Taxes

Indiana property owners who have appealed a property tax bill still must pay the original bill, even if the appeal is pending. The taxpayer has the option of submitting an amount based on the previous year's property tax value during the appeals process. Conversely, Indiana property owners may also pay property taxes for the current year in full, which will lead to a reimbursement if the appeal is successful.



If the property owner loses the appeal, the State of Indiana website states that she will have to pay a penalty of 10 percent interest per year on property taxes due, which starts on the original property tax due date. Taxpayers have until the following May 10 or Nov. 10, whichever is sooner, to pay property taxes, or additional penalties will be levied.

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