Advertising Material

Advertising Material


Developers: Are You Doing Business with a State Agency?

As of January 1, 2014, I.C. 6.1.1-10-2 provides that real estate leased to a State Agency of Indiana is exempt from property taxes if the lease, regardless of the commencement date, requires the State Agency to reimburse the owner for property taxes. If the State Agency leases less than all of parcel of real property, the exemption is a partial exemption that is equal to the part of the gross assessed value of the real property attributable to the part of the real property leased by the State Agency.

A State Agency is any board, commission, department, division, bureau, committee, authority, military body, college, university or other instrumentality of Indiana, but does not include a political subdivision or an instrumentality of a political subdivision.

Therefore, if a private developer leased a unit in its commercial development to the State of Indiana for the location of a Bureau of Motor Vehicle office and the lease requires the Bureau of Motor Vehicles to reimburse the developer all property taxes, that unit leased to the Bureau of Motor Vehicles would be exempt from taxation.

Developers should examine your leases and if you have leases with a State Agency, regardless of the date of the lease, that leased premises is now exempt from property taxes. New leases with a State Agency should be drafted to require the State Agency to reimburse the developer property taxes in order to exempt the leased premises.