Porter County Ruling Allows Homeowners To Claim Homestead Deduction In Two States

I always thought the law was pretty clear on this point, but the Porter County Tax Appeal Board sees it differently. Indiana homeowners are permitted to take a deduction on just one home they own--the one in which they primarily reside. That annual deduction reduces an individual's property tax liability considerably. Ogden Dunes resident Dorothy Kurtz claimed the deduction on her Indiana home, while her husband is claiming a similar deduction for a home he owns in Florida. The Porter Co. Auditor said she couldn't do that. The tax appeal board sided with Kurtz and ruled that she and her husband can claim a homestead deduction on their Indiana home even if they are claiming one on their Florida home.

The key words in the statute defining a "homestead" is "an individual's principal place of residence." State Sen. Karen Talian (D-Ogden Dunes) argued to the board that the state's homestead deduction law only limits homeowners to a single homestead deduction within the state; it does not mean they can't claim homestead deductions if they own homes in other states where they also claim a homestead deduction. The Northwest Indiana Times has more on a dispute with statewide implications:

Attorney and State Sen. Karen Tallian, D-Ogden Dunes, who represented Kurtz, argued that state law speaks about Indiana alone when it limits these tax breaks to one primary residence.

This was made explicitly clear in 2011, though was intended in years prior, Tallian said, who has served as a state lawmaker since 2005. The Kurtz appeal focused on the period of 2008-2010.

Attorney Jon Schmaltz, who represented the county auditor's office during Tuesday's hearing, disagreed and argued the state law limits homestead deductions to one primary residence, no matter how many states are involved.

"I don't think it's ambiguous," he said.

Porter County Auditor Bob Wichlinski, who has led a crackdown on homestead deduction violators, said he regrets that unlike the petitioner in these cases, he does not have the option of appealing the local decision to the state.

"It is not their job to interpret the law," he said of the three-member Porter County Property Tax Assessment Board of Appeals. "This is a serious misinterpretation of what their responsibility is."

I suppose that Sen. Talian would argue that Kurtz and her husband can also legally register and vote in both Indiana and Florida since they are only claiming one principal residence in each state. Or perhaps the Kurtz's claim principal residents in two different states because they don't live together. I would be curious to see which state they each claim as their principal residence for purposes of filing their tax returns since Florida has no state income tax. And if they are filing joint tax returns, which house are they claiming for purposes of deducting mortgage interest payments.