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
