Cost Segregation in Indiana

America's Crossroads offers investors one of the lowest flat tax rates at 3.05%, constitutional property tax caps, and some of the most affordable housing in the Midwest — combined with full bonus depreciation conformity, Indiana delivers exceptional cost segregation ROI per dollar invested.

Population
6.8M
Median Home
$240K
Property Tax
0.83%
20th lowest in U.S.
State Income Tax
3.05%
Flat
Bonus Depreciation
Full
State Conformity
Avg. Insurance
$1,500
35% below average
Tax Strategy

Cost Segregation & Tax Rules in Indiana

Understanding how federal and Indiana state tax rules interact is critical to maximizing your cost segregation benefits.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Median Home Price
$240K
Building Value
82%
of purchase price
Cost Seg Range
22-35%
of building reclassified
Median Home Age
38 yrs
Built ~1986
What Gets Reclassified

A cost segregation study identifies building components that can be depreciated over 5, 7, or 15 years instead of the standard 27.5 or 39 years. In Indiana, typical reclassification rates are 22-35% of building value.

Common Property Types
Single-Family RanchBrick Single-FamilySmall Multi-Family (2-4 units)Townhomes
Indiana's affordable property prices mean lower study fees with exceptional ROI. The high building-to-land ratio (82%) maximizes your depreciable basis. Properties in the $200-300K range offer the sweet spot of study cost vs. tax savings.
Overline Study Cost & ROI
Overline Study Cost
$499 - $2,000
Avg. ROI
10-40x

The math: A $240K property with 82% building value and 30% reclassification yields ~$22K in Year 1 federal tax savings at the 37% bracket — significantly more ROI than traditional studies costing $5,000-$10,000+.

Housing Stock Advantage

With a median build year of 1986, Indiana's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

Full Conformity
Indiana Bonus Depreciation Conformity

Indiana fully conforms to IRC Section 168(k) bonus depreciation. At just 3.05%, IN has one of the nation's lowest flat income tax rates, but full conformity means every dollar of accelerated depreciation flows through to both your federal and state returns in Year 1.

What This Means for Your Investment: Full conformity means cost seg benefits are maximized in Indiana. Federal AND state deductions apply in Year 1. Combined with Indiana's ultra-affordable property prices, the ROI per dollar invested is among the highest in the country.

Federal vs. IN Depreciation Timeline
PeriodFederal TreatmentIN State Treatment
Year 1100% bonus depreciation100% bonus depreciation (full conformity)
Years 2+Standard MACRS schedulesSame as federal
Section 179 Expensing
State ConformityConforms

Indiana conforms to federal Section 179 limits. Combined with the state's constitutional property tax caps, Section 179 adds another layer of tax efficiency for IN rental property investors.

Key Takeaway

A $240K property with a $197K depreciable basis and 30% cost seg reclassification yields ~$21,845 in federal tax savings PLUS ~$1,801 in IN state tax savings in Year 1 — a total of ~$23,646 on a very affordable property.

Bottom Line

Indiana is a full-conformity state. Every dollar of federal bonus depreciation flows through to your IN state return with no addback or modification. The flat 3.05% state rate adds a clean, predictable state-level benefit on top of federal savings.

Eff. Property Tax
0.83%
20th lowest in U.S.
Transfer Tax
No transfer tax
State Income Tax
3.05%
Flat
Property Tax Details

Indiana caps property taxes by property class: 1% for homesteads, 2% for rental/agricultural, 3% for commercial. This constitutional cap provides predictability and protects investors from runaway tax bills.

Assessment Methodology
MethodMarket value-in-use with trending factors
Reassessment CycleAnnually (with trending adjustments)
Assessment BodyCounty Assessor
Appeal WindowJune 15 or 45 days after notice (whichever is later)
Appeal Success Likelihood
Moderate
LowModerateGoodVery High

Indiana's 1% property tax cap for homesteads and 2% cap for rental properties provides built-in protection. The trending factor system can create discrepancies in volatile markets. Appeals go through the County Property Tax Assessment Board of Appeals (PTABOA).

Work with Overline — Our team helps Indiana investors identify over-assessed properties and file tax appeals. A successful appeal can save thousands annually and compounds your cost seg savings.

Illustrative Example

Cost Seg Example for Indiana

This example assumes a purchase eligible for 100% bonus depreciation. All factors below are based on averages from our historical cost segregation studies for IN properties. To see your exact savings, run a property-specific cost seg analysis below.

Typical Indiana Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$196,800
$240,000 x 82%
Normal Annual Depreciation$7,156
$196,800 ÷ 27.5 yr (residential)
5-Year Reclassified$35,424
15-Year Reclassified$23,616
Total Accelerated$59,040
30% of $196,800 building value
Federal Tax Savings (Year 1)$21,845
$59,040 x 37% bracket
Total Year 1 Tax Savings$21,845
8.3x normal annual deduction captured in Year 1

IN State Tax: IN has full bonus depreciation conformity — your state tax savings also apply in Year 1.

Depreciable Basis

Land vs. Building Value in Indiana

The land-to-building ratio directly impacts your cost segregation benefit — only the building portion is depreciable. Here is how Indiana breaks down by region.

Statewide Average
Building (Depreciable)82%
Land (Non-Depreciable)18%
82%
Depreciable Basis
Breakdown by Region
Indianapolis Metro
80% Building

State capital with moderate land costs. Suburban growth keeps building ratios strong.

Fort Wayne
86% Building

Very affordable with excellent building-to-value ratios. Strong cost seg potential per dollar invested.

Carmel / Fishers (Hamilton Co.)
75% Building

Affluent northern suburbs with higher land values. Premium rents offset the lower building ratio.

Bloomington
82% Building

University town with balanced ratios. Strong student rental demand drives occupancy.

Rural Indiana
90% Building

Lowest land costs. Exceptional cost seg ratios but smaller rental markets.

Investor Takeaway

Indiana offers outstanding building-to-value ratios across nearly every market. Fort Wayne's 86% and Indianapolis's 80% both support strong cost seg returns. Even the affluent Carmel/Fishers suburbs maintain 75% building ratios with premium rents to compensate.

Insurance & Risk

Insurance Landscape in Indiana

Insurance costs directly impact your cash flow. Understanding Indiana's risk profile helps you budget accurately and avoid coverage gaps.

Avg. Annual Premium
$1,500
35% below average
National Average
$2,300
for comparison
Premium Trend
Rising 4-6% annually, below national trend
Primary Risk Drivers
1
Tornadoes & Severe Storms
Indiana experiences 20+ tornadoes annually. Central and southern IN are most at risk. EF3+ events occur periodically.
2
Hail Damage
Frequent hail events from spring through summer. Roof replacement claims are the primary cost driver.
3
Winter Storms
Heavy snow and ice can cause structural damage. Frozen pipe bursts are common in older homes.
Coverage Recommendations
Standard homeowner's policy with replacement cost coverage
Wind/hail deductible awareness (typically 1-2% of dwelling coverage)
Sewer/drain backup coverage recommended for older urban homes
Umbrella liability ($1M+) for rental properties
Cost Seg + Insurance Connection

Indiana's low insurance costs are a major cash flow advantage. A cost seg study documents component values that support accurate replacement cost estimates — particularly valuable for Indiana's older renovated housing stock where original construction records may be limited.

Market Fundamentals

Economy & Housing Demand in Indiana

Strong economic engines create stable rental demand. Here is what drives Indiana's economy and housing market.

State GDP
$430B
Growing 2.1%/year
Unemployment
3.3%
Below national average
Median Income
$62,000
+15.8% over 5 years
Pop. Growth (1Y)
+0.5%
+25,000/year net migration
Major Industries
Manufacturing18%
Indiana is America's #1 state for manufacturing GDP share. Eli Lilly, Cummins, Subaru (Lafayette), and thousands of auto parts suppliers.
Healthcare14%
IU Health (largest employer), Anthem/Elevance Health HQ, Community Health Network. Indianapolis is a healthcare hub.
Logistics & Distribution12%
FedEx hub (Indianapolis), Amazon fulfillment centers, and the "Crossroads of America" interstate convergence.
Technology10%
Salesforce Tower (Indy), Infosys US headquarters, growing tech scene anchored by Purdue/IU talent pipeline.
Agriculture8%
Indiana is #5 in U.S. corn production and #3 in soybean production. $11B+ annual agricultural output.
Key Economic Engines
Eli Lilly: 12,000+ IN employees, $8B+ investment in new manufacturing facilities
Indianapolis Motor Speedway: $1B+ annual economic impact, global brand recognition
FedEx Hub: Major logistics center at Indianapolis International Airport
Purdue/IU pipeline: 80K+ university students feeding talent into state economy
Housing Demand Signals
5-Year Pop. Growth
+2.8%
Housing Permits YoY
+5.5%
Median Days on Market
25 days
Months of Inventory
1.8
Migration: Affordability attracts families from Chicago and other high-cost Midwest metros. Eli Lilly expansion and tech growth bring professional workers. Military families cycle through Crane and Grissom.
Construction: Brick ranch single-story, Wood frame with vinyl siding, Slab-on-grade and basement foundation, Multi-family garden apartments
Landlord & STR Rules
Landlord Friendliness
Very Friendly
Eviction Timeline
30-45 days
Rent Control
Prohibited statewide
STR Regulation
Minimal

Indiana has no state-level STR ban or licensing requirements. Indianapolis requires STR registration and a 9% local innkeeper's tax. Most other Indiana cities have minimal or no specific STR regulations.

Local Markets

Top Cities for Investors in Indiana

Explore city-level cost segregation data, sample deals, and investment fundamentals for each major market in Indiana.

Indianapolis, IN
#1 in Indiana
Median Home
$275K
Rent (3BR)
$1,700
Property Tax
0.98%
Avg. Insurance
$1,500/yr
Est. Year 1 Tax Savings$26K+
View Indianapolis Details
Fort Wayne, IN
Cash Flow King
Median Home
$195K
Rent (3BR)
$1,300
Property Tax
0.75%
Avg. Insurance
$1,300/yr
Est. Year 1 Tax Savings$19K+
View Fort Wayne Details
Local Partners

Investor-Friendly Partners in Indiana

We are building a curated directory of top investor-friendly brokers, property management companies, and service providers in Indiana.

Investor-Friendly Brokers

Top real estate agents who specialize in investment properties and understand cost segregation, 1031 exchanges, and cash-flow analysis.

Coming Soon
Property Management

Vetted property managers who handle tenant screening, maintenance, and rent collection for both long-term and short-term rentals.

Coming Soon
Insurance Agents

Independent insurance agents who specialize in rental property coverage and can leverage cost seg data for accurate replacement cost estimates.

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in Indiana?

Partner With Overline
Frequently Asked Questions

Cost Segregation FAQ — Indiana

Does Indiana conform to federal bonus depreciation?

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Indiana fully conforms to IRC Section 168(k) bonus depreciation. At just 3.05%, IN has one of the nation's lowest flat income tax rates, but full conformity means every dollar of accelerated depreciation flows through to both your federal and state returns in Year 1.

What is the property tax rate in Indiana?

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The effective property tax rate in Indiana is 0.83%, ranked 20th lowest in U.S. in the U.S. Indiana caps property taxes by property class: 1% for homesteads, 2% for rental/agricultural, 3% for commercial. This constitutional cap provides predictability and protects investors from runaway tax bills.

How much can I save with cost segregation in Indiana?

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A $240K property with a $197K depreciable basis and 30% cost seg reclassification yields ~$21,845 in federal tax savings PLUS ~$1,801 in IN state tax savings in Year 1 — a total of ~$23,646 on a very affordable property.

What are the typical cost segregation reclassification rates in Indiana?

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In Indiana, typical cost segregation studies reclassify 22-35% of building value into accelerated depreciation categories (5-year, 7-year, and 15-year property). Overline studies cost $499-$2,000 with 10-40x ROI.

What is the average insurance cost for rental properties in Indiana?

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The average annual homeowner insurance premium in Indiana is $1,500, which is 35% below average the national average of $2,300. Key risk drivers include Tornadoes & Severe Storms and Hail Damage.

What is the state income tax rate in Indiana?

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Indiana has a state income tax rate of 3.05% (Flat). Indiana's flat 3.05% rate is among the lowest state income taxes in the nation. County income taxes add 0.5%-2.9% depending on location. The low flat rate combined with full bonus depreciation makes IN exceptionally investor-friendly.

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