Tulsi Sawlani, M.D. v. Lake County Assessor
FOR PUBLICATION, July 24, 2024 (2024)
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Rule of Law:
The Indiana Constitution's 1% property tax cap for a principal residence, which applies to tangible property including "curtilage," does not permit the legislature to impose a fixed, one-acre statutory limitation on the amount of land eligible for the cap. A statutory one-acre limit is unconstitutional as applied to taxpayers who can demonstrate that land in excess of one acre is used as part of their principal place of residence.
Facts:
- Dr. Tulsi and Kamini Sawlani own a two-story home in Crown Point, Indiana.
- Their home is situated on a total of 3.981 acres of land.
- For the 2019 tax assessment, their property was divided for tax purposes.
- The Sawlanis' home and one acre of the surrounding land were assessed under a 1% property tax cap.
- The remaining 2.981 acres of their land were classified as nonresidential real property and assessed under a 3% property tax cap.
Procedural Posture:
- Dr. Tulsi and Kamini Sawlani appealed their 2019 property tax assessment to the Lake County Property Tax Assessment Board of Appeals.
- Following the county board's decision, the Sawlanis appealed to the Indiana Board of Tax Review.
- The Indiana Board of Tax Review rejected the Sawlanis' claims, concluding it lacked the authority to resolve the constitutional question they presented.
- The Sawlanis then initiated an original tax appeal in the Indiana Tax Court.
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Issue:
Does the Indiana statute (Ind. Code § 6-1.1-12-37(a)(2)) that limits the 1% property tax cap to a principal residence and only one acre of surrounding land violate Article 10, Section 1 of the Indiana Constitution, which applies the cap to "[t]angible property, including curtilage, used as a principal place of residence" without an explicit acreage limit?
Opinions:
Majority - McAdam, J.
Yes. The Indiana statute limiting the 1% property tax cap to one acre is unconstitutional as applied to taxpayers whose principal residence includes more than one acre of land. The court's reasoning is that the plain text of the Indiana Constitution, which applies the cap to "[t]angible property, including curtilage, used as a principal place of residence," contains no fixed size or acreage limitations. The court examined the terms "tangible property," "principal place of residence," and "curtilage" and found that none of them imply a strict one-acre boundary; the concept of curtilage is flexible and depends on use and other factors, not a predetermined size. The court rejected the Assessor's arguments based on legislative history and ballot language, holding that such materials cannot override the unambiguous text of the Constitution itself. The statute is not unconstitutional on its face, as it can be applied constitutionally to properties of one acre or less, but it is unconstitutional as applied to taxpayers who can show that land beyond one acre is part of their principal residence's curtilage.
Analysis:
This decision invalidates the bright-line, one-acre statutory rule for Indiana's 1% residential property tax cap, replacing it with a flexible, fact-specific standard based on the constitutional term "curtilage." The ruling establishes that the extent of a property's curtilage must be determined on a case-by-case basis, focusing on how the land is used in connection with the principal residence. This will likely lead to an increase in administrative appeals by property owners of larger parcels, requiring tax assessors and boards to develop and apply a factual framework for determining how much land is reasonably part of a residence, rather than relying on a simple statutory measurement.
