HB 1384

                                                           Introduced Version
          HOUSE BILL No. 1384
                _____
              DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-1.1-10-16.
Synopsis: Nonprofit hospital property taxes. Provides that real
property purchased before July 1, 2026, directly or indirectly owned by
a nonprofit hospital (other than a critical access hospital or a county
hospital) is not exempt from property taxation if, after 10 years from
the date of purchase of the property by the nonprofit hospital, the
property directly or indirectly owned by the nonprofit hospital is not
being used for the performance of revenue producing health care
services by the nonprofit hospital that directly or indirectly owns the
property. Provides that real property directly or indirectly owned by a
nonprofit hospital purchased after June 30, 2026, is not exempt from
property taxation if the property directly or indirectly owned by the
nonprofit hospital is not being used for the performance of revenue
producing health care services by the nonprofit hospital that directly or
indirectly owns the property. Provides that the disallowance of an
exemption does not apply to a parking garage, parking lot, equipment
facility area, or any other similar property that actively serves a
nonprofit hospital. Provides that a determination as to whether a
parking garage, parking lot, equipment facility area, or any other
similar property actively serves a nonprofit hospital shall be made by
the board of zoning appeals with jurisdiction over the property.
Effective: January 1, 2027.
                 Smaltz, Carbaugh
   January 8, 2026, read first time and referred to Committee on Ways and Means.
2026  IN 1384—LS 6839/DI 134
                                                                                       Introduced
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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 between statutes enacted by the 2025 Regular Session of the General Assembly.
                   HOUSE BILL No. 1384
    A BILL FOR AN ACT to amend the Indiana Code concerning
 taxation.
     Be it enacted by the General Assembly of the State of Indiana:
1     SECTION 1. IC 6-1.1-10-16, AS AMENDED BY P.L.230-2025,
2 SECTION 26, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2027]: Sec. 16. (a) All or part of a building is exempt
4 from property taxation if it is owned, occupied, and used by a person
5 for educational, literary, scientific, religious, or charitable purposes.
6     (b) A building is exempt from property taxation if it is owned,
7 occupied, and used by a town, city, township, or county for educational,
8 literary, scientific, fraternal, or charitable purposes.
9     (c) A tract of land, including the campus and athletic grounds of an
10 educational institution, is exempt from property taxation if:
11(1) a building that is exempt under subsection (a) or (b) is situated
12on it;
13(2) a parking lot or structure that serves a building referred to in
14subdivision (1) is situated on it; or
15(3) the tract:
16(A) is owned by a nonprofit entity established for the purpose
17of retaining and preserving land and water for their natural
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1characteristics;
2(B) does not exceed five hundred (500) acres; and
3(C) is not used by the nonprofit entity to make a profit.
4     (d) A tract of land is exempt from property taxation if:
5(1) it is purchased for the purpose of erecting a building that is to
6be owned, occupied, and used in such a manner that the building
7will be exempt under subsection (a) or (b); and
8(2) not more than four (4) years after the property is purchased,
9and for each year after the four (4) year period, the owner
10demonstrates substantial progress and active pursuit towards the
11erection of the intended building and use of the tract for the
12exempt purpose. To establish substantial progress and active
13pursuit under this subdivision, the owner must prove the existence
14of factors such as the following:
15(A) Organization of and activity by a building committee or
16other oversight group.
17(B) Completion and filing of building plans with the
18appropriate local government authority.
19(C) Cash reserves dedicated to the project of a sufficient
20amount to lead a reasonable individual to believe the actual
21construction can and will begin within four (4) years.
22(D) The breaking of ground and the beginning of actual
23construction.
24(E) Any other factor that would lead a reasonable individual to
25believe that construction of the building is an active plan and
26that the building is capable of being completed within eight (8)
27years considering the circumstances of the owner.
28 If the owner of the property sells, leases, or otherwise transfers a tract
29 of land that is exempt under this subsection, the owner is liable for the
30 property taxes that were not imposed upon the tract of land during the
31 period beginning January 1 of the fourth year following the purchase
32 of the property and ending on December 31 of the year of the sale,
33 lease, or transfer. The county auditor of the county in which the tract
34 of land is located may establish an installment plan for the repayment
35 of taxes due under this subsection. The plan established by the county
36 auditor may allow the repayment of the taxes over a period of years
37 equal to the number of years for which property taxes must be repaid
38 under this subsection.
39     (e) Personal property is exempt from property taxation if it is owned
40 and used in such a manner that it would be exempt under subsection (a)
41 or (b) if it were a building.
42     (f) A hospital's property that is exempt from property taxation under
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1 subsection (a), (b), or (e) shall remain exempt from property taxation
2 even if the property is used in part to furnish goods or services to
3 another hospital whose property qualifies for exemption under this
4 section.
5     (g) Property owned by a shared hospital services organization that
6 is exempt from federal income taxation under Section 501(c)(3) or
7 501(e) of the Internal Revenue Code is exempt from property taxation
8 if it is owned, occupied, and used exclusively to furnish goods or
9 services to a hospital whose property is exempt from property taxation
10 under subsection (a), (b), or (e).
11     (h) This section does not exempt from property tax an office or a
12 practice of a physician or group of physicians that is owned by a
13 hospital licensed under IC 16-21-2 or other property that is not
14 substantially related to or supportive of the inpatient facility of the
15 hospital unless the office, practice, or other property:
16(1) provides or supports the provision of charity care (as defined
17in IC 16-18-2-52.5), including providing funds or other financial
18support for health care services for individuals who are indigent
19(as defined in IC 16-18-2-52.5(b) and IC 16-18-2-52.5(c)); or
20(2) provides or supports the provision of community benefits (as
21defined in IC 16-21-9-1), including research, education, or
22government sponsored indigent health care (as defined in
23IC 16-21-9-2).
24 However, participation in the Medicaid or Medicare program alone
25 does not entitle an office, practice, or other property described in this
26 subsection to an exemption under this section.
27     (i) A tract of land or a tract of land plus all or part of a structure on
28 the land is exempt from property taxation if:
29(1) the tract is acquired for the purpose of erecting, renovating, or
30improving a single family residential structure that is to be given
31away or sold:
32(A) in a charitable manner;
33(B) by a nonprofit organization; and
34(C) to low income individuals who will:
35(i) use the land as a family residence; and
36(ii) not have an exemption for the land under this section;
37(2) the tract does not exceed three (3) acres; and
38(3) the tract of land or the tract of land plus all or part of a
39structure on the land is not used for profit while exempt under this
40section.
41     (j) An exemption under subsection (i) terminates when the property
42 is conveyed by the nonprofit organization to another owner.
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1     (k) When property that is exempt in any year under subsection (i) is
2 conveyed to another owner, the nonprofit organization receiving the
3 exemption must file a certified statement with the auditor of the county,
4 notifying the auditor of the change not later than sixty (60) days after
5 the date of the conveyance. The county auditor shall immediately
6 forward a copy of the certified statement to the county assessor. A
7 nonprofit organization that fails to file the statement required by this
8 subsection is liable for the amount of property taxes due on the
9 property conveyed if it were not for the exemption allowed under this
10 chapter.
11     (l) If property is granted an exemption in any year under subsection
12 (i) and the owner:
13(1) fails to transfer the tangible property within eight (8) years
14after the assessment date for which the exemption is initially
15granted; or
16(2) transfers the tangible property to a person who:
17(A) is not a low income individual; or
18(B) does not use the transferred property as a residence for at
19least one (1) year after the property is transferred;
20 the person receiving the exemption shall notify the county recorder and
21 the county auditor of the county in which the property is located not
22 later than sixty (60) days after the event described in subdivision (1) or
23 (2) occurs. The county auditor shall immediately inform the county
24 assessor of a notification received under this subsection.
25     (m) If subsection (l)(1) or (l)(2) applies, the owner shall pay, not
26 later than the date that the next installment of property taxes is due, an
27 amount equal to the sum of the following:
28(1) The total property taxes that, if it were not for the exemption
29under subsection (i), would have been levied on the property in
30each year in which an exemption was allowed.
31(2) Interest on the property taxes at the rate of ten percent (10%)
32per year.
33     (n) The liability imposed by subsection (m) is a lien upon the
34 property receiving the exemption under subsection (i). An amount
35 collected under subsection (m) shall be collected as an excess levy. If
36 the amount is not paid, it shall be collected in the same manner that
37 delinquent taxes on real property are collected.
38     (o) Property referred to in this section shall be assessed to the extent
39 required under IC 6-1.1-11-9.
40     (p) This subsection applies to assessment dates occurring before
41 January 1, 2026. A for-profit provider of early childhood education
42 services to children who are at least four (4) but less than six (6) years
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1 of age on the annual assessment date may receive the exemption
2 provided by this section for property used for educational purposes
3 only if all the requirements of section 46 of this chapter are satisfied.
4 A for-profit provider of early childhood education services that
5 provides the services only to children younger than four (4) years of
6 age may not receive the exemption provided by this section for
7 property used for educational purposes.
8    (q) This subsection applies to assessment dates occurring after
9 December 31, 2025. Property used by a for-profit provider of early
10 childhood education services to children who are less than six (6) years
11 of age on the annual assessment date may receive the exemption
12 provided by this section for property used for educational purposes
13 only if all the requirements of section 46 of this chapter are satisfied.
14    (r) This subsection and subsection (s) do not apply to a critical
15 access hospital that meets the criteria under 42 CFR 485.601 or to
16 a county hospital. Notwithstanding any other law, real property
17 directly or indirectly owned by a nonprofit hospital purchased
18 prior to July 1, 2026, is not exempt from property taxation if, after
19 ten (10) years from the date of purchase of the property by the
20 nonprofit hospital, the property directly or indirectly owned by the
21 nonprofit hospital is not being used for the performance of revenue
22 producing health care services by the nonprofit hospital that
23 directly or indirectly owns the property. For purposes of this
24 subsection, "health care services" means the:
25      (1) assessment;
26      (2) diagnosis;
27      (3) evaluation;
28      (4) consultation;
29      (5) treatment; and
30      (6) monitoring;
31 of an entity's patients. The term includes medical education,
32 preventative care, rehabilitative services, long term care, and
33 administrative services that are necessary for the provision of a
34 patient's care.
35    (s) Real property directly or indirectly owned by a nonprofit
36 hospital purchased after June 30, 2026, is not exempt from
37 property taxation if the property directly or indirectly owned by
38 the nonprofit hospital is not being used for the performance of
39 revenue producing health care services by the nonprofit hospital
40 that directly or indirectly owns the property. For purposes of this
41 subsection, "health care services" has the meaning set forth in
42 subsection (r).
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1    (t) The disallowance of an exemption under subsection (r) does
2 not apply to a parking garage, parking lot, equipment facility area,
3 or any other similar property that actively serves a nonprofit
4 hospital. A determination under this subsection as to whether a
5 parking garage, parking lot, equipment facility area, or any other
6 similar property actively serves a nonprofit hospital shall be made
7 by the board of zoning appeals with jurisdiction over the property.
8    (r) (u) This subsection applies only to property taxes that are first
9 due and payable in calendar years 2025 and 2026. All or part of a
10 building is deemed to serve a charitable purpose and is exempt from
11 property taxation if it is owned by a nonprofit entity that is:
12      (1) registered as a continuing care retirement community under
13      IC 23-2-4 and charges an entry fee of not more than five hundred
14      thousand dollars ($500,000) per unit;
15      (2) defined as a small house health facility under
16      IC 16-18-2-331.9;
17      (3) licensed as a health care or residential care facility under
18      IC 16-28; or
19      (4) licensed under IC 31-27 and designated as a qualified
20      residential treatment provider that provides services under a
21      contract with the department of child services.
22 This subsection expires January 1, 2027.
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