2023 Indiana Code › Title 6. Taxation › Article 1.1. Property Taxes › Chapter 4. Procedures for Real Property Assessment › 6-1.1-4-4.5. Annual Adjustment of Assessed Value of Real Property; State Review and Certification; Base Rate Methodology; Adjustment in Assessed Value Based on Estimated True Tax Value

Sec. 4.5. (a) The department of local government finance shall adopt rules establishing a system for annually adjusting the assessed value of real property to account for changes in value in those years since a reassessment under section 4.2 of this chapter for the property last took effect.
(b) Subject to subsection (f), the system must be applied to adjust assessed values beginning with the 2006 assessment date and each year thereafter that is not a year in which a reassessment under section 4.2 of this chapter for the property becomes effective.
(c) The rules adopted under subsection (a) must include the following characteristics in the system:
(1) Promote uniform and equal assessment of real property within and across classifications.
(2) Require that assessing officials:
(A) reevaluate the factors that affect value;
(B) express the interactions of those factors mathematically;
(C) use mass appraisal techniques to estimate updated property values within statistical measures of accuracy; and
(D) provide notice to taxpayers of an assessment increase that results from the application of annual adjustments.
(3) Prescribe procedures that permit the application of the adjustment percentages in an efficient manner by assessing officials.
(d) The department of local government finance must review and certify each annual adjustment determined under this section.
(e) For an assessment beginning after December 31, 2022, agricultural improvements such as but not limited to barns, grain bins, or silos on land assessed as agricultural shall not be adjusted using factors, such as neighborhood delineation, that are appropriate for use in adjusting residential, commercial, and industrial real property. Those portions of agricultural parcels that include land and buildings not used for an agricultural purpose, such as homes, homesites, and excess residential land and commercial or industrial land and buildings, shall be adjusted by the factor or factors developed for other similar property within the geographic stratification. The residential portion of agricultural properties shall be adjusted by the factors applied to similar residential purposes.
(f) In making the annual determination of the base rate to satisfy the requirement for an annual adjustment for each assessment date, the department of local government finance shall not later than March 1 of each year determine the base rate using the methodology reflected in Table 2-18 of Book 1, Chapter 2 of the department of local government finance's Real Property Assessment Guidelines (as in effect on January 1, 2005), except that the department shall adjust the methodology as follows:
(1) Use a six (6) year rolling average adjusted under subdivision (3) instead of a four (4) year rolling average.
(2) Use the data from the six (6) most recent years preceding the year in which the assessment date occurs for which data is available, before one (1) of those six (6) years is eliminated under subdivision (3) when determining the rolling average.
(3) Eliminate in the calculation of the rolling average the year among the six (6) years for which the highest market value in use of agricultural land is determined.
(4) After determining a preliminary base rate that would apply for the assessment date without applying the adjustment under this subdivision, the department of local government finance shall adjust the preliminary base rate as follows:
(A) If the preliminary base rate for the assessment date would be at least ten percent (10%) greater than the final base rate determined for the preceding assessment date, a capitalization rate of eight percent (8%) shall be used to determine the final base rate.
(B) If the preliminary base rate for the assessment date would be at least ten percent (10%) less than the final base rate determined for the preceding assessment date, a capitalization rate of six percent (6%) shall be used to determine the final base rate.
(C) If neither clause (A) nor clause (B) applies, a capitalization rate of seven percent (7%) shall be used to determine the final base rate.
(D) In the case of a market value in use for a year that is used in the calculation of the six (6) year rolling average under subdivision (1) for purposes of determining the base rate for the assessment date:
(i) that market value in use shall be recalculated by using the capitalization rate determined under clauses (A) through (C) for the calculation of the base rate for the assessment date; and
(ii) the market value in use recalculated under item (i) shall be used in the calculation of the six (6) year rolling average under subdivision (1).
(g) For assessment dates after December 31, 2009, an adjustment in the assessed value of real property under this section shall be based on the estimated true tax value of the property on the assessment date that is the basis for taxes payable on that real property.
(h) The department shall release the department's annual determination of the base rate on or before March 1 of each year.
As added by P.L.198-2001, SEC.8. Amended by P.L.245-2003, SEC.4; P.L.228-2005, SEC.4; P.L.136-2009, SEC.2; P.L.112-2010, SEC.1; P.L.112-2012, SEC.3; P.L.180-2016, SEC.2; P.L.255-2017, SEC.6; P.L.232-2017, SEC.2; P.L.86-2018, SEC.26; P.L.8-2022, SEC.1.