Marion County homestead rules for a house hack

If you buy a duplex, or a house with a room or unit you plan to rent, can you still get Marion County's homestead deduction? Yes, on the part you live in. The rented part does not get it. Indiana's homestead form, HC10, says no income-producing portion of the dwelling is eligible, and its examples include "one-half of a duplex side" and a rented apartment that is part of the structure.

So one building can carry two tax treatments. The part that is your principal place of residence, which Indiana law now defines as your "true, fixed, permanent home" (DLGF memo, May 27, 2026), gets the homestead deductions and a tax cap of 1% of gross assessed value. The rented part is taxed as other property, and a unit in a building with two or more dwelling units falls in the 2% cap group. You file with the Marion County Auditor, and the auditor decides the split.

House hacking means buying a home you live in and renting part of it to help offset housing costs. That rent comes with a landlord's work: repairs, vacancies, and shared space. Nothing here promises rent, tax savings, or a loan approval.

What matters before you count on a number

Two terms first. Assessed value is the county's value for the tax bill, not the price you pay. A deduction lowers that taxable value. A credit comes off the tax after the rate is applied.

When I walk a buyer through a duplex, I start with the parcel's current tax bill and the county's deduction search, before anyone talks about rent. Those show what the property gets today, under the current owner. Your result depends on your own filing and on how you use the building. The search may not show an application that was just filed, so treat it as a starting point.

The tax year matters too. Approved deductions show on the bill the year after the assessment date (State Form 51781), and the amounts change every year through 2031.

The deduction amounts, by tax year

The Indiana Department of Local Government Finance (DLGF) listed the amounts in its May 27, 2026 memo:

• January 1, 2025 assessment, taxes due in 2026: a $48,000 standard deduction, then a supplemental deduction of 40% of what remains.
• January 1, 2026 assessment, taxes due in 2027: a $40,000 standard deduction, then a supplemental deduction of 46% of what remains.

The standard deduction keeps shrinking: $30,000 for the 2027 assessment, $20,000 for 2028, $10,000 for 2029, and $0 from 2030 on. The supplemental rate climbs to 52% for taxes due in 2028, 57% in 2029, 62% in 2030, and 66.7% in 2031 and after. Before 2025, the standard deduction was the lesser of 60% of assessed value or $48,000.

One filing covers both deductions. The supplemental deduction comes after the standard one and cannot exceed 75% of gross assessed value, the value before deductions (State Form 51781).

A separate supplemental homestead credit applies to taxes first due after December 31, 2025. It is the lesser of $300 or one-tenth of the tax on the homestead, with voter-approved referendum taxes left out, and you do not apply for it (DLGF memo, June 12, 2025).

One catch: the county's homestead page still describes the older "60% or $48,000" standard deduction and the 40% supplemental. Use the amounts for the year on your bill.

The side you live in and the side you rent

HC10 asks you to describe any part of the home, or of the land up to one acre around it, that produces income. The assessor then records a homestead value and a non-residential value. On that form, "non-residential" just means the value kept out of the homestead.

A homestead is the house you live in plus up to one acre, limited to one house and one garage. It can include one extra building that is mostly residential and is not a rental, so a cottage you rent out does not count (HC10). Only one individual or married couple gets the deduction on a homestead. If a company is on the deed, the form says it is not entitled unless the statute's entity rules are met.

Here is how the two sides compare on the bill due in 2027, from the January 1, 2026 assessment:

The 12% comes from Indiana Code 6-1.1-12-47, a deduction for property under the 2% cap, including residential property outside the homestead. It is 6% of assessed value for taxes due in 2026 and 12% for taxes due in 2027 (DLGF memo, May 27, 2026). Look for the line on your bill.

How a single rented room gets measured is not spelled out on the form. That is a question for the auditor, not a guess.

How the 1% and 2% caps work

Circuit breaker credits, Indiana's property tax caps, limit the tax to a percent of gross assessed value. They do not change the local rate. If the tax runs over the cap, the auditor credits the excess (DLGF circuit breaker fact sheet).

The fact sheet lists 1% for homestead property, 2% for residential property, and 3% for nonresidential property. A property must receive the homestead standard deduction to get the 1% cap. Residential property includes a single-family home that is not a homestead and a building with two or more dwelling units. The fact sheet's example: a homestead with a gross assessed value of $100,000 has a ceiling of $1,000. Your tax can come in below the ceiling.

How to file in Marion County

File HC10 with the Marion County Auditor, or make the claim on the sales disclosure form when you buy (State Form 51781). The auditor's office is in Suite W-125 of the City-County Building, 200 E. Washington Street, open 8:00 a.m. to 4:30 p.m., Monday through Friday. The office says the best way to file is online, and the confirmation email is the only receipt. Keep it.

File by January 15 of the year the taxes are first due. The county says an application completed by January 15, 2026, shows on the bill issued in spring 2026, and those taxes are due May 11 and November 10, 2026. The auditor has until mid-February to approve a January 15 filing, and after that the deduction carries forward. You must be living in the home as your principal place of residence when you sign (HC10). File again if you add or remove an owner or put the home in a trust.

These are the questions I would bring to the auditor's office about a specific parcel:

1. How will you split homestead and non-homestead value on this building?
2. If I rent one room, how do you measure the rented part?
3. If I close on this date, which tax bill will my filing reach?

If you move out and rent the whole place

Once you move out, the building is no longer your principal place of residence. The standard deduction, the supplemental deduction, the credit, and the 1% cap go with it. A fully rented building with two or more units lands in the 2% group.

Tell the auditor within 60 days of the change. The May 27, 2026 DLGF memo says that if you do not, and you keep claiming the deduction, you owe the additional taxes that would have been due plus a civil penalty of 10% of those taxes. If the auditor later finds the home was not eligible, a separate 10% fine for claiming falsely is figured on your whole tax bill as if the deduction had not applied.

Hypothetical example

These figures are made up to show the steps. They are not a real assessment, your bill, or a promise of savings.

Say the assessor records $100,000 of gross assessed value on the side you live in and $100,000 on the side you rent, for the bill due in 2027. On your side, the $40,000 standard deduction leaves $60,000. The supplemental deduction is 46% of $60,000, or $27,600, which leaves $32,400 of net assessed value. The rented side gets neither deduction, though the 12% deduction for 2% property may apply there. The 1% ceiling on your side is $1,000, and the 2% ceiling on the rented side is $2,000. The local rate and the auditor's split decide the real bill.

The tradeoffs, and what to skip

The upside is real but limited. Your side can keep the homestead deductions and the 1% cap, and rent from the other side may help with the payment. The costs are real too. The rented side is taxed without those deductions, under a higher cap. You take on a tenant, repairs, and empty months, and a shared wall or a shared kitchen means less privacy. You also own the paperwork, including the 60-day notice if your use changes.

Skip these:

• Online calculators that still use the "60% or $48,000" formula for a 2027 bill.
• Treating the seller's current tax bill as your future bill.
• Assuming a rented room is handled the same way as a duplex side. Ask the auditor.

A manageable next step

Property tax is one line in the budget. If you are weighing a duplex, the FHA guide for a 2-4 unit home in Indianapolis covers the loan side. If you would rather rent a room, start with the rules before you rent a room in Indianapolis. To run your own numbers, Roots Realty has a house hack calculator and a look at what house hacking costs in Indianapolis in 2026.

Not sure yet whether sharing a building fits your life? The house-hacking quiz walks through the tradeoffs, and Find Your Place in Indy suggests neighborhoods to explore based on what matters to you. When you want to look at a real parcel, talk with me. I'm Kyle Hoffman, a REALTOR with Roots Realty Co., licensed in Indiana, and you can read my story here.

Sources

• Indiana Form HC10 (State Form 5473): income-producing parts are not eligible, the duplex example, what counts as a homestead, living there when you sign.
• DLGF memo, May 27, 2026: principal place of residence, deduction amounts by year, the 2% property deduction, the 60-day notice and penalties.
• DLGF memo, June 12, 2025: the supplemental homestead credit.
• State Form 51781: when deductions reach the bill, one form for both deductions, the 75% limit, the sales disclosure option.
• DLGF circuit breaker fact sheet: the 1%, 2% and 3% caps and the $100,000 example.
• Marion County Auditor's office: address, hours, online filing, approval timing.
• Indy.gov homestead deduction page: the January 15 deadline, filing again, and the older formula it still shows.
• Indy.gov property tax due dates: May 11 and November 10, 2026.

Last reviewed September 2026.

This is general information, not tax, legal or lending advice. Confirm your parcel with the Marion County Auditor and your return with a tax professional.