The Indiana Supreme Court issued a unanimous decision Tuesday clarifying the scope of the state's constitutional property tax cap for residential properties, ruling that homeowners cannot claim tax protections beyond one acre regardless of their property's actual curtilage.
In *Tulsi Sawlani, M.D. v. Lake County Assessor*, decided Oct. 7, 2025, the court addressed whether Indiana's one-acre limit on homestead tax exemptions violates the state constitution when applied to properties with larger curtilage areas. The case involved Dr. Tulsi Sawlani and Kamini Sawlani, who owned a home on 3.981 acres in Lake County and challenged the assessor's refusal to apply the one percent tax cap to their entire property.
Justice Goff, writing for a unanimous court that included Chief Justice Rush and Justices Massa, Slaughter, and Molter, held that the taxpayers failed to prove their constitutional claim. The court reversed the Indiana Tax Court's judgment and remanded with instructions to affirm the Indiana Board of Tax Review's determination favoring the Lake County Assessor.
The Indiana Constitution limits property tax liability based on property classification. For residential properties used as a principal place of residence, including curtilage, taxpayers' liability cannot exceed one percent of the property's gross assessed value. The Indiana Tax Code implements this constitutional provision by defining "homestead" as the dwelling and surrounding real estate "not exceeding one acre."
The Sawlanis argued that this one-acre statutory limit violated their constitutional rights because their actual curtilage extended beyond one acre. Curtilage refers to the area immediately surrounding a dwelling that is closely associated with the home's domestic activities. Under their theory, the constitutional tax cap should apply to their entire curtilage regardless of size.
However, the Supreme Court rejected this argument on evidentiary grounds. The court held that even if curtilage could theoretically extend beyond one acre for tax purposes, the Sawlanis failed to demonstrate that their excess property actually constituted curtilage. This factual failure meant they could not carry their burden of proving their constitutional claim.
The decision represents a significant clarification of Indiana's property tax system, which has been shaped by constitutional amendments aimed at providing tax relief to homeowners. The one percent cap for residential properties was designed to limit the tax burden on principal residences while maintaining revenue for local governments and schools.
Property tax caps have become increasingly important as assessed values have risen across Indiana. The constitutional provision ensures that homeowners' tax bills cannot exceed specific percentages of their property's assessed value, providing predictability and protection against dramatic tax increases.
The case began in the Indiana Tax Court, where the Sawlanis initially prevailed. However, the Supreme Court's reversal clarifies that statutory limitations on homestead size are presumptively valid and that taxpayers bear a heavy burden when challenging such limits on constitutional grounds.
The ruling affects property owners throughout Indiana who own homes on acreage exceeding one acre. While the decision does not definitively resolve whether curtilage can ever extend beyond one acre for tax purposes, it establishes that property owners must present substantial evidence to support such claims.
Lake County Assessor successfully defended the traditional interpretation of homestead limits, arguing that the one-acre statutory cap serves legitimate governmental interests in tax administration and revenue collection. The assessor's position was that allowing unlimited curtilage claims would create administrative difficulties and potentially reduce local tax revenues needed for public services.
The decision also reflects broader tensions in property tax law between constitutional protections for homeowners and practical administrative needs. Courts must balance taxpayer rights with local governments' need for stable revenue sources to fund schools, police, fire departments, and other essential services.
For practitioners in Indiana property tax law, the decision emphasizes the importance of thorough factual development when challenging statutory homestead limitations. Future cases involving similar constitutional claims will likely require extensive evidence about property use, curtilage boundaries, and the relationship between structures and surrounding land.
The Supreme Court heard oral arguments in the case June 26, 2025, before issuing its decision. The case arose from Tax Court proceedings that began in 2021, reflecting the lengthy appellate process often required to resolve complex constitutional questions in property tax law.
The unanimous nature of the decision suggests broad agreement among the justices about the proper interpretation of homestead tax caps. This consensus may provide guidance for lower courts handling similar disputes and encourage consistent application of homestead rules across Indiana's 92 counties.
Looking ahead, the decision may prompt legislative discussions about whether Indiana's homestead definitions adequately reflect modern property ownership patterns. Some property owners may seek legislative changes to expand homestead protections, while local governments may prefer maintaining current limits to preserve tax base stability.