Indiana's Property Tax Deferral Law: What NWI Sellers Need to Know

Does Indiana's New Property Tax Deferral Program Affect My Home Sale?

Yes. Indiana's Senate Bill 1 lets counties offer homeowners a property tax deferral of up to $500 a year, capped at $10,000 total, and that deferred amount becomes a lien against your home. When you sell, the lien comes due within 180 days, and it gets settled at closing before you see your proceeds. If you're selling a home in Lake, Porter, or La Porte County and you've used this program, or you're buying one from someone who has, this is the piece of the 2026 tax reform you need to understand before you sign anything.

By the Constellation Home Sales Team | July 23, 2026

Indiana homeowners have spent the past several months hearing about property tax relief, and most of the coverage has focused on the good news: a new homestead credit, a bigger standard deduction, and an estimated $1.3 billion in statewide savings over the next three years. That part is real, and it matters.

What gets less attention is the deferral program buried inside the same legislation, and it's the part that actually shows up on a closing statement. I walk sellers through this constantly right now, so here's the plain-English version.

What SB 1 Changes on Your 2026 Tax Bill

Governor Braun signed Senate Enrolled Act 1 after a long legislative fight over how to deliver relief without gutting local services. For homeowners in Northwest Indiana, three pieces matter most.

• A new homestead credit. Most homesteads get a credit equal to 10% of the property tax bill, up to $300. Homeowners 65 and older can add another $150, and disabled veterans can add $250.

• A bigger standard deduction, phased in. The homestead standard deduction starts growing in 2026 and keeps climbing each year until it reaches two-thirds of your home's assessed value by 2031.

• An optional deferral program. Counties can let eligible homeowners delay up to $500 of their tax bill each year, up to $10,000 lifetime, rather than paying it in full.

The first two show up as lower bills. The third is where sellers need to slow down.

The Deferral Program — and Why It Matters Before You List

Here's the mechanic that doesn't make it into most of the headlines: deferred property taxes under this program don't disappear. They convert into a lien on your property, and Indiana law requires that lien be paid off within 180 days of a "deferral termination event." Selling your home is one of those events. So is no longer using it as your primary residence.

Practically, this means the title company handling your closing will identify the lien and pay it off out of your sale proceeds before you receive your check, similar to how an existing mortgage balance gets settled. Counties administering the program can charge interest on the deferred amount, capped at 4%, so the total owed at closing can run higher than the sum of what you deferred year to year.

A few things worth confirming before you list:

• Whether your county offers the program at all. This is county-optional, meaning Lake County, Porter County, and La Porte County can each set their own terms, and one of the three may not participate the same way another does. Confirm your specific status with your county treasurer's office.

• Eligibility rules already applied. The program generally requires five years of ownership, primary-residence use, and no delinquent taxes, so not every homeowner who wanted to defer was able to.

• Your running total. If you've deferred taxes in more than one year, ask your county treasurer for the current balance, including accrued interest, well before you sign a listing agreement.

Timing matters here in a way it doesn't for a typical sale. With Lake, Porter, and La Porte County home prices climbing through the first half of 2026, a lot of sellers are moving faster than they expected, and a deferral lien is not something you want to discover the week before closing.

What This Means If You're Buying, Not Selling

If you're on the buying side, this cuts the other way. A property tax deferral lien attaches to the home, not the person, so it's the kind of thing your title search needs to catch before you close on a purchase in Northwest Indiana.

This matters most on older homes with long-tenured owners, since the five-year ownership requirement means newer buyers can't have used the program yet. If you're looking at new construction or a recently built home, this is largely a non-issue. It's a more relevant question in an established neighborhood, similar to the kind of due diligence buyers are already doing around new development activity like Crown Point's Fountains Project, where property histories and tax records vary block to block.

Ask your title company directly whether a deferral lien shows up on the property you're under contract on. It should surface during a standard title search, and if it does, it gets resolved before you close, not after.

One more filing worth knowing about: at closing, Indiana requires a Sales Disclosure Form (State Form 46021) to be submitted to the county auditor. This is a tax-assessment filing, not a property-condition disclosure, and it's a separate document from the Seller's Residential Real Estate Sales Disclosure that covers things like the roof, mechanical systems, and known defects. The Form 46021 filing, along with any county filing fee your title company can confirm, is typically where a deferral balance gets reconciled on the county's side of the transaction.

Frequently Asked Questions

What is Indiana's new property tax deferral program?

It's an optional program, created under 2025's Senate Bill 1, that lets participating counties allow eligible homeowners to delay up to $500 of their property tax bill per year, up to a lifetime cap of $10,000. The deferred amount becomes a lien on the home and can accrue interest of up to 4%, set by the county.

Do I have to repay deferred property taxes when I sell my home in Northwest Indiana?

Yes. Selling the home is a deferral termination event, and the deferred balance, plus any accrued interest, must be paid within 180 days. In practice, your title company settles this out of your sale proceeds at closing, so it reduces what you walk away with.

Is the property tax deferral program available in Lake, Porter, and La Porte counties?

It depends on the county. The program is optional for each county to adopt starting July 1, 2025, and terms can differ. Confirm directly with your county treasurer's office whether the program is active where you live and what your current balance would be.

How does Indiana's homestead deduction change affect my 2026 tax bill?

Starting in 2026, the homestead standard deduction begins increasing each year, reaching two-thirds of your home's assessed value by 2031. Combined with the new homestead credit, most homeowners will see a bill lower than what they paid in 2025.

What should buyers check for regarding property tax deferrals before purchasing a home?

Ask your title company to confirm whether any deferred property tax lien is attached to the home during the title search. This is more likely on homes owned five or more years by the same owner and generally does not apply to new construction.

Property tax relief is genuinely good news for most Northwest Indiana homeowners, and the deferral piece is exactly the kind of detail that's easy to miss until it shows up on a closing statement. If you've deferred taxes and you're weighing a sale, or you're under contract on a home and want to know what's actually attached to it, that's a conversation worth having before you sign anything. Text or call 630-919-9129 and we'll help you find out where you stand.

About the Constellation Home Sales Team The Constellation Home Sales Team — Steve and Kimberly Genovese — has closed more than 615 transactions worth over $113 million across Chicago's southwest suburbs and Northwest Indiana. Licensed since 2003 and operating under Keller Williams Preferred Realty, the team specializes in probate and estate sales, expired listings, negotiation, and divorce and life-transition sales, with a track record of selling homes at 101% of list price against a 97.7% MLS-wide average.