CROWN POINT | The Lake County Auditor's Department office is reaching out one last time to thousands of homeowners about to lose a valuable property tax deduction.
Auditor Peggy Katona said her office is sending letters to 10,000 county residents whose homestead credits the state is about to revoke because the homeowners failed to provide identification needed to verify their ownership status.
She said those owners have until Dec. 31 to respond by going online to www.taxpayerconnection.com. The homeowners must fill out a state form noting their Social Security or or state driver's license numbers or expect their property taxes to be significantly higher next year.
This is the last of a several-year effort to eliminate invalid homestead deductions, which illegally increase taxes on law-abiding residents.
The Indiana Department of Local Government Finance reported homestead deductions have become a target of fraud because they are so valuable and in short supply.
The deductions benefit homeowners by reducing a property's assessed value -- in many cases by more than half its market value up to a maximum of $645,000 -- and capping taxes at no more than 1 percent of the reduced assessed value in most Indiana counties.
In Lake County, the cost of servicing government debt still raises the tax cap above the 1 percent level in many communities. Nevertheless, the caps can lower a family's taxes by hundreds of dollars each year.
Individuals and married couples are limited by state law to one homestead standard deduction. But more than 300 Lake County residents were recently found to possess two or more deductions.
Multiple homestead credits have slipped official notice in the past because the houses involved were once principal residences and eligible for homestead credits but were sold to landlords and converted to rental properties without the knowledge of tax officials.
Indiana recently followed other states in cracking down on multiple deductions by creating a digital database of homeowners.
Katona said other states, including Illinois, Michigan and Florida have taken similar measures.
Katona said her office already has collected more than $2 million from those owners caught with invalid deductions and hopes to collect an additional $2 million in back taxes that were avoided.
She said this purge will benefit law-abiding taxpayers in the future by preventing invalid deductions in the coming years.