More than $1 million has been collected in back taxes from Allen County property owners who filed ineligible homestead exemptions – and there’s more on the way.
The revenue will continue to increase since the audit will not be completed for 18 months, County Auditor Tera Klutz said. A home must be the owner’s primary residence to claim a homestead exemption.
The homestead exemption on property taxes is worth 60 percent of the assessed value of the property or $45,000, whichever is less.
A 2009 change in state law required homeowners to verify eligibility. Since that time, homeowners have been notified and asked to return a pink form verifying the deduction, Klutz said.
Those who did not respond were again notified the following year, she said. Those who notified the county that they were ineligible in 2010 or 2011 were given amnesty and the homestead deductions were simply removed, Klutz said.
Although state law allows county auditors to remove any homestead that has not been verified, Klutz’s office has not automatically removed the homestead exemptions.
Instead, we have mailed homestead audit questionnaires to those with unverified homesteads, auditing them one-by-one, she said. It’s the taxpayer-friendly way to handle it.
If a homestead is found not to be the primary residence, the exemption is removed and the taxpayer is billed for up to three years in back taxes, Klutz said.
Homeowners have the ability to apply or vacate homestead exemptions on a sales disclosure form, a required form on all real estate transfers, Klutz said.
Some may not be aware of their homestead status because many times the forms are completed by title agencies that are unaware of how the taxpayer intends to use the property, she said.
With the elimination of ineligible exemptions, the county will have a broader tax base, helping all county tax units to collect more taxes this year and going forward, Klutz said.
So far, the largest amount of back taxes billed and paid were by TES Properties LLC, a Fort Wayne company that had 49 homestead deductions found to be ineligible, Klutz said.
The company – listed as a property management company on the Internet – bought a lot of sheriff’s sale properties and there might have been delays on title transfers, she said.
An official with TES Properties paid the back taxes and penalties of $123,000, no questions asked, Klutz said.
Attempts by The Journal Gazette to contact TES Properties were unsuccessful.
The arduous task of auditing homesteads falls to Crystal Jones, a property tax manager in the auditor’s office.
Letters were sent out to all questionable homesteads, instructing owners to explain their eligibility.
Some replied and some did not, Jones said.
The first thing we do is try to verify the addresses, which requires a lot of searching and phone calls she said.
After they verify the taxpayer’s address and confirm that the homestead is not a primary residence, the staff computes the back taxes owed, adding a 10 percent penalty and sends an invoice, Jones said.
Most people are very nice, even the ones who are not happy to hear they owe back taxes, she said.
The majority do not even call us – they just send a check, she said.