The Demopublicans and Republicrats in Indianapolis passed some really bad legislation this session.
Lets look at another stupid piece...
The members of the Indiana House and Senate are both worried about their re-election chances if property taxes continue to increase, and they should be. According to a recent study Indiana property taxes will increase an average of 24% this year alone.
This is outrageous.
Local spending is out of control and I have not heard one elected official talk about cutting spending; all they talk about is increasing taxes. This is true of both Republicans and Democrats.
So their answer for the next two years is to send property tax payers a rebate each year. I have heard that this rebate check will be mailed late in 2007 or early in 2008. This will be awful.
So lets say you paid about $3400 in property taxes last year. That means if they go up 24% you will be paying $4216... Wow.
Since Indianapolis is messing with property taxes again the local Assessors Offices will mail out their assessments late, again.
You will have to pay much higher property taxes twice per year or through your escrow account. Then late in the year or next year you will get a rebate check. This is going to be a nightmare come tax time.
Remember I prepare taxes for a living.
One of the most common tax deductions is for property taxes. If you itemize your deductions on your Federal tax return then you can deduct your property taxes from your income. In Indiana you can deduct your property taxes whether you itemize or not.
So every Indiana taxpayer who owns property can deduct their property taxes from their Indiana taxable income.
So lets say that your taxes went up to $4200 in 2007 and you pay that amount. By law, your mortgage company must send you a 1098 form telling you what you paid in property taxes by January 31st of the following year. They will HAVE NO IDEA what your property tax rebate is. They will simply tell you what you paid.
So lets say you pay $4200 in property taxes in 2007. Lets say your mortgage company sends you a 1098 telling you that you paid $4200 in property taxes on Jan 31st, 2008. Then lets say Indiana send you a rebate check for $600 on February 15th.
How will you handle that on your taxes?
My guess is that you will claim the full property tax amount as a deduction and that you will then have to report the $600 as taxable income to the Federal Government.
What a joke.
What are these people thinking?
Do they think?
Do they consider what the effect of their legislation will be?