Buildings
Real estate assessments for buildings and improvements are determined
by using the rules of the Department of Local Government Finance.
Assessments are based on fair market value in use, which is usually
somewhat less than market value on new construction. However,
cost as well as market comparisons can be used to make a reasonable
estimate of value.
- Tax Formula: Cost x net tax rate
Land
The assessed value of land is the cost or value of the land,
as it is currently used.
- Tax Formula: Cost x net tax rate
Depreciable Personal Property
The assessed value for depreciable personal property (machinery,
equipment and office furniture) is multiplied by a percentage
based on the life of the asset. Straight line depreciation procedures
are used.
- Tax Formula: Cost x depreciated % x net tax rate
Inventory
Inventory, which consists of raw materials, work-in-progress
and finished goods, is currently taxed as personal property in
Indiana. Inventory destined for out-of-state shipment and work-in-progress
may be exempt. Hendricks and Morgan counties have already eliminated
the inventory tax. All other counties will eliminate the inventory
tax in the 2006 payable 2007.
- Tax Formula: Cost (Indiana portion of inventory) – 35%
x net tax rate
* In tax tear 2006 payable 2007, the inventory tax is completely
eliminated. *
Special Tools
Special tools are property such as tools, dies, molds, jigs and
patterns used for the production of specific products or product
models. The usefulness of special tools ceases with the modification
or discontinuation of the product or product model. The assessed
value of special tools purchased in the previous twelve months
is 76% of cost, while all other special tools on hand are valued
at 53% of cost.
- Tax Formula: Cost x depreciation% (1st yr. 42%, 2nd yr. 14%,
3rd yr. or more 2%) x net tax rate
Personal Property Not Placed in Service
Personal property not placed in service as of the assessment
date (such as construction in progress) qualifies as a special
valuation item. The assessed value of personal property not placed
in service is 10% of cost.
- Tax Formula: Cost x .10 x net tax rate
