Buried in SEA 1's hundreds of sections is a tool Indiana has never had before: a county-option homestead property tax deferral program. Section 85 of the act created a new chapter of the Indiana Code (IC 6-1.1-52, effective July 1, 2025) that lets a county fiscal body adopt an ordinance allowing qualified homeowners to postpone part of their property tax bill — not erase it, postpone it — with the deferred amount secured by a lien on the home.
The DLGF laid out the full mechanics in its September 18, 2025 memo to county officials. Here is what homeowners — and county councils still weighing adoption — need to know.
The program in numbers
A qualified homeowner in an adopting county can defer at least $100 and at most $500 of homestead property tax liability in a given year, beyond the normal due dates. Deferrals can repeat year after year (a fresh agreement is signed each year) until the cumulative $10,000 cap is reached — the cap counts tax only, not accrued interest. Counties decide in the enabling ordinance whether interest accrues and at what rate, up to the 4 percent ceiling.
This is liability after deductions and credits — the deferral applies on top of the homestead deductions and the $300 SEA 1 credit, not instead of them. Special assessments, stormwater fees, and other charges that ride on the tax statement cannot be deferred.
Who qualifies
The statute sets a floor; counties can add more requirements. The baseline "qualified individual" under IC 6-1.1-52-4:
- Owns a qualified interest in the homestead (ownership, or a recorded land contract where the buyer pays the taxes) on the assessment date
- Has held that interest at least five years before first applying
- Uses the home as their principal place of residence — with a humane carve-out: someone moved into a health care facility still qualifies if the homestead was their principal residence immediately before admission
- Is not delinquent on any property taxes, special assessments, or billed fees
Counties may layer on their own criteria in the ordinance — the DLGF memo specifically lists a senior age requirement, an assessed value ceiling (it gives $300,000 as an example), veteran status, or an income limit. So eligibility in Tippecanoe County may not look like eligibility in Vanderburgh County. The ordinance must apply countywide and must be adopted by November 1 to take effect for the following year's bills.
How applying works
In an adopting county, the process runs through the county auditor on DLGF-prescribed forms:
- File a Tax Deferral Loan Application by January 15 of the year the taxes are due
- Get written approval from every lien holder on the property — in practice, your mortgage lender must sign off
- Agree not to pay your remaining, non-deferred installments through escrow
- Sign a Tax Deferral Loan Agreement with the auditor before March 1, and pay any recorder's filing fees
Note the language the state itself uses: loan application, loan agreement. That is the right mental model. Once approved, the deferral is recorded with the county recorder — and that recording constitutes a lien on your home. Once you are in, you remain eligible in later years as long as you keep meeting the requirements, though a new agreement is signed for each year deferred.
There is also a hard solvency check: no deferral is allowed if deferred taxes plus all other liens plus outstanding mortgage principal would exceed 100 percent of the homestead's assessed value. Heavily leveraged homes cannot use the program.
When the bill comes due
Deferred taxes and accrued interest become due 180 days after a "deferral termination event" — the earliest of:
- The day the home stops being your principal residence
- The day you no longer hold a qualified interest (you sell or transfer it)
- Your death
A surviving spouse who lived in the home when the qualified individual died, and who takes a qualified interest in it, can step into the deceased spouse's shoes and keep the deferral running rather than facing a 180-day payoff clock.
You can pay the deferred balance early at any time. Miss the 180-day window, and the balance is collected like delinquent property taxes — penalties, and ultimately exposure to the tax sale process. When deferred taxes are paid, the money is distributed to the local taxing units and the recorder releases the lien.
Who should consider it — and who should not
A reasonable fit
- Cash-constrained seniors planning to age in place. This is the program's clear target. A homeowner deferring $500 a year for a decade carries a $5,000 lien (plus modest interest, at most 4 percent) against what is usually far more home equity. The estate settles it. Compare it first against the over-65 deduction and circuit breaker credit, which reduce the bill outright — claim those before deferring what is left.
- Owners facing a temporary squeeze — a gap year before retirement income starts, or a one-time bill spike from reassessment, while an appeal works through the system.
A poor fit
- Anyone planning to sell or refinance within a few years. The lien must be satisfied at closing, and a refinance requires the new lender to tolerate a government lien with priority characteristics — many will simply require payoff. You will have converted a manageable annual expense into a lump sum plus interest, due at the worst possible moment.
- Anyone whose lender will not consent. The written-approval requirement gives mortgage holders a veto, and the no-escrow condition conflicts with how most mortgaged homeowners already pay taxes. Realistically, this program works best for homes owned free and clear.
- Anyone who can comfortably pay. Deferral is a loan, not relief. At up to 4 percent, it is cheap debt — but the supplemental homestead deduction phase-in is already trimming taxable values through 2031, so the bill you are deferring may shrink on its own.
Warning
Read the lien implications before the dollar amounts. The deferral is recorded against your title, requires your mortgage holder's written consent, becomes fully due 180 days after you move, transfer, or die, and turns into delinquent-tax collection if unpaid. For the right homeowner that trade is fine; for the wrong one it is a trap that surfaces during a sale or an estate settlement.
How to find out if your county adopted it
Adoption is county by county, and the state — counties could begin adopting ordinances as early as the law's July 1, 2025 effective date — does not maintain a homeowner-facing list. The DLGF asked adopting counties to notify it, but notification is not mandatory. To check your county:
- Call the county auditor or treasurer and ask whether the fiscal body has adopted a homestead tax deferral ordinance under IC 6-1.1-52
- Search county council minutes and ordinances from late 2025 onward — remember the November 1 adoption deadline for the following tax year
- Ask what local criteria apply — age, AV ceiling, income — since those vary by ordinance
Should counties adopt it? The case both ways
For adoption: the fiscal cost is mild by design. Deferred dollars are capped at $500 per homestead per year, the county earns up to 4 percent on the float, the lien plus the 100-percent-of-AV test makes eventual collection nearly certain, and it gives councils a targeted answer for fixed-income constituents — especially in counties weighing unpopular replacement LIT increases to backfill SEA 1 revenue losses.
Against adoption: real administrative weight falls on the auditor, treasurer, and recorder — applications, annual loan agreements, lien recordings, termination-event tracking, settlement-period accounting by taxing district, and DLGF reporting, all for what may be a small pool of users deferring a few hundred dollars each. The DLGF memo itself nudges counties to make sure they can actually fulfill every statutory requirement before adopting. Small counties with thin office staff may reasonably conclude the existing senior deductions and credits already serve the same population with far less machinery.
The bottom line
The deferral program is a narrow tool done carefully: small annual amounts, a lifetime cap, lender consent, a recorded lien, and a 180-day payoff trigger. For long-tenured, low-mortgage homeowners in adopting counties — especially seniors determined to stay put — it can turn an annual cash-flow problem into a deferred estate expense at modest interest. For everyone else, exhaust the deductions, credits, and appeal rights that reduce the bill before signing up for a loan against your house. Start by confirming what your parcel is actually billed through the property lookup, then call your auditor to see whether your county has switched the program on.