Every subdivision built in the last few decades carries parcels nobody lives on: the retention pond, the entry signage strip, the pool lot, the walking trail, the private street. Since 2015, Indiana law has said those parcels are exempt from property taxation — yet county records across the state still show HOA-owned common areas carrying assessed value and generating bills.
The statute is IC 6-1.1-10-37.5 (added by P.L.148-2015), and if you sit on an HOA board or you're a developer platting a new section, it's worth ten minutes to understand how it actually works.
What Counts as a "Common Area"
The statute defines a common area as a parcel of land, including improvements, in a residential development that:
- is legally reserved for the exclusive use and enjoyment of all lot owners, occupants, and their guests — whether or not any individual owner actually uses it;
- is owned by the developer (in a fiduciary capacity for all lot owners), by the lot owners equally or pro rata, or by a person, trust, or entity holding title for the benefit of all lot owners;
- cannot be transferred for value without approval of all lot owners, or a majority if the HOA's governing documents permit majority approval; and
- does not include — and is not designed or approved for — a Class 2 structure (under IC 22-12-1-5, essentially a one- or two-unit dwelling or townhouse).
The statute's own illustrative list is generous: "a lake, pond, street, sidewalk, park, green area, trail, wetlands, signage, swimming pool, clubhouse, or other features or amenities that benefit all lot owners." Retention ponds, private streets, and amenity lots are squarely covered.
Not Automatic — But Not Form 136 Either
Unlike the nonprofit exemption process, the common-area exemption doesn't run through an annual application cycle. The statute's mechanism, in subsections (d) through (h):
- The easements and covenants restricting use and conveyance of the common area must be recorded.
- Notice must be provided to the county or township assessor.
- The assessor then designates the area as a common area — or, if the assessor disagrees, must send a written statement within 30 days citing the specific provisions at issue, after which the owner gets 30 days to cure.
- If the assessor never sends that statement, the parcel is considered a common area by operation of law — subsection (g).
- Once designated, no refiling is required unless the parcel later stops meeting the definition.
An adverse determination is reviewable by the county PTABOA under subsection (j) — the same board that hears assessment appeals, so the evidence-preparation playbook applies.
Note
The 30-day deemed-designation rule in subsection (g) is unusually taxpayer-friendly: if your HOA sent proper notice with recorded covenants and the assessor stayed silent, the exemption exists whether or not anyone updated the CAMA system. The paperwork trail — recording date, notice date — is your proof.
The Audit Every Board Should Run
HOA-owned parcels slip through because nobody's mortgage escrow depends on them. Pull every parcel titled to the association (or still titled to the developer) and check three things:
- Assessed value. A designated common area should show an exempt status, not a taxable AV. Our property lookup and county explorer surface AV and taxable status per parcel; the parcel numbers guide helps you enumerate everything the association owns.
- Classification. A common area misclassified as ordinary vacant land will be priced off the neighborhood land schedule — exactly what the statute overrides.
- The record card. Confirm what the assessor thinks sits on the parcel; the record card walkthrough shows where to look.
Warning
The disqualifier to watch is the Class 2 structure rule: a parcel designed or approved for a house cannot be a common area. A "spare lot" the HOA holds for possible future sale fails the transfer-restriction test too. Don't try to stretch the exemption over land that's really inventory — it forfeits the designation.
Developers: Handle the Handoff Deliberately
Subsection (i) lets a common area be created during or after development, and expansions require lot-owner approval plus any county or municipal sign-offs. The failure mode we see in county data: the developer plats the pond parcel, never records the restrictive covenants or sends assessor notice, then transfers to the HOA years later — with back tax bills attached. Record the covenants and notify the assessor at platting, and paper the eventual HOA transfer as the fiduciary arrangement the statute requires.
Note the companion provision: IC 6-1.1-10-37.8 separately exempts HOA-owned personal property held for members' use — the pool furniture and maintenance equipment, not just the land.
Tip
Condo regimes are a different animal — common elements there are typically assessed through the units themselves, as covered in our condo assessment post. Section 37.5 is aimed at platted subdivisions with separate common-area parcels.
The full landscape of what can come off an Indiana tax bill is in our complete exemptions and deductions list — the common-area exemption is one of the few that, once established, quietly takes care of itself.