Tax Court reverses grant of homestead deduction to couple owning property in Indiana, Illinois

A Monroe County couple is not entitled to claim homestead deductions on both their Illinois and Indiana homes, which they had done for several years after moving to Indiana, the Indiana Tax Court has ruled.

The Tax Court on Tuesday reversed and remanded a final determination from the Indiana Board of Tax Review, which found Kim and Richard Strychalski were entitled to a standard homestead deduction for their Unionville property during the 2015, 2016 and 2017 tax years. At the same time, they also had a homestead deduction on their Illinois home, where they had relocated from in 2014.

According to the Monroe County assessor, the Strychalskis responded in their “Homestead Standard Deduction Audit Questionnaire” that their driver’s licenses, voter registrations and tax return filings were all in Illinois for 2015, 2016 and 2017. Also, they had yet to change their Illinois voter registrations in 2019.

Based on those responses, they were not eligible for Indiana’s homestead deduction for each of the years at issue. The couple appealed to the Monroe County Property Tax Assessment Board of Appeals and to the Indiana Board of Tax Review, the latter of which ruled in their favor.

While Indiana Tax Court Judge Martha Blood Wentworth did not “disturb the Indiana Board’s discrete finding that the Indiana property was the Strychalskis’ principal place of residence during the years at issue,” she reversed the board’s finding that they were entitled to an Indiana homestead deduction.

“The Indiana Board’s reliance on the absence of contrary evidence to show the (Strychalskis’) son would be entitled to the Illinois homestead deduction wrongly turns the burden of proof concept on its head. Indeed, at the administrative level, the Strychalskis, who challenged their assessments, bore the burden to prove they were entitled to Indiana’s homestead deduction; the Assessor was not required in the first instance to prove they were not,” Wentworth wrote.

“… Furthermore, other than Kim Strychalski’s conclusory statement that the Illinois homestead deduction was mistakenly recorded in their names rather than their son’s, there is no additional testimony or other evidence to show their son would have been eligible for the Illinois homestead deduction during the years at issue,” she continued.

Wentworth went on to note the lack of evidence, “conclusory or otherwise,” that a correction was made for the years under appeal in removing the couple’s names from the Illinois homestead deduction and replacing it with their son’s name.

“The sum of the evidence, without contradiction, establishes that the Illinois correction was done for the year the Strychalskis made the change at the Illinois office and prospectively. No evidence relates the correction, however, to the years at issue,” the court wrote. “… Accordingly, the Strychalskis did not show that Illinois removed their names from the homestead deduction or that Illinois retroactively placed the homestead deduction in their son’s name for the years at issue.”

The court therefore found the Strychalskis had more than one homestead deduction in their names for the years at issue in violation of Indiana Code § 6-1.1-12-37(h) and thus reversed. It found the Indiana board’s final determination to be “conclusory, unsupported by probative evidence, and an abuse of discretion because it is clearly against the logic and effect of the facts and circumstances in this matter and misapplies the law.”

The case of Monroe County Assessor v. Kim Strychalski and Richard Strychalski, 20T-TA-11, was thus remanded to the board for the assessor to adjust the Strychalskis’ property tax assessments for 2015, 2016 and 2017 to reflect the removal of the Indiana homestead deduction.