| Real Estate |
|
Q.
What is a Levy Authority? |
| A Levy Authority is a governmental entity with statutory authority
to levy property taxes. These entities include counties, cities, school
districts, townships, community colleges, local assessors, and others. |
|
Q.
What is a legal description? |
| A legal description is a description of real estate that is used in
legal documents such as abstracts, deeds, mortgages, etc. For example:
“Lot One (1) in Frank’s Subdivision, Mason City, Iowa”. |
|
Q.
What is an
administrative real estate description? |
| An administrative real estate description is a description of real
estate used by county offices for real estate assessment and taxation
administrative purposes. Typically, it will be similar to a legal
description, but may contain abbreviations or other summaries. For
example: “L 1 Frank’s Sub”. |
|
Q.
What is a property class? |
| Real estate parcels are annually assigned a property class by the
local assessor or the Iowa Department of Revenue. Property classes
include Agricultural, Residential, Commercial, Industrial, Railroad,
Utility, and Gas & Electric Utility. |
|
Q.
Does the local assessor set the value for all real estate property? |
| No. Property owned by railroads and utility companies is valued by
the Iowa Department of Revenue and certified for taxation to the county
auditor. |
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|
Q.
Do
railroads and utility companies pay real estate taxes? |
| Yes, except that utilities defined as gas & electric utilities pay
excise taxes. Railroad and utility values are included in the tax base
for the respective Levy Authorities, and both real estate and excise
taxes are paid to those Levy Authorities. |
|
Q.
Where do my taxes go? |
| Your taxes are apportioned by the county treasurer to Levy
Authorities such as the school district, city or township, and county in
which your real estate parcel is located. If your property is in a Tax
Increment Financing (TIF) Area, most of your taxes are probably
apportioned to a TIF Authority, such as a city. You can see the
distribution of your taxes on your tax bill. |
|
Q.
What is Taxable Value? |
|
Taxable Value is the value used to calculate taxes and on which the tax
askings of the various Levy Authorities are based. |
|
Q.
What
does it mean that 100% Actual Value is “equalized”? |
| The Iowa Department of Revenue imposes equalization orders in
odd-numbered years against each property class for each local assessor.
Sometimes called “the assessor’s report card”, the equalization order is
used to increase or decrease 100% Actual Values when those values are
not sufficiently accurate. |
|
Q.
How does the Iowa Department of Revenue know when a local assessor’s
100% Actual Values are not sufficiently accurate? |
| The Department receives a copy of the Declaration of Value required
to be filed with the county recorder when real estate is sold. Actual
sales values are then compared to the local assessor’s 100% Actual
Values. |
|
Q.
Is “local
assessor” the same as county assessor? |
| Usually, unless your property is in one of the following cities in
Iowa that have chosen to have a separate city assessor: Mason City,
Ames, Clinton, Dubuque, Iowa City, Cedar Rapids, Davenport, and Sioux
City. |
|
Q.
What is an “ag dwelling”, and why do I get a separate tax bill for it?
|
An ag dwelling is a residence that sits on land classified as
agricultural, such as a house on a 40-acre tract of farmland. Iowa law
requires the value of the house to be taxed as residential property,
while the value of the farmland is taxed as agricultural property.
For certain tax administrative purposes, many counties create a separate
tax parcel for an ag dwelling. In the case of an ag dwelling within city
limits, this allows the county to apply the regular (full) city tax rate
to the ag dwelling and the city ag (lower) tax rate to the land.
|
|
Q.
What offices at the county are involved in the assessment and taxation
of real estate? |
| The assessor, county auditor, and county treasurer are part of the
tax cycle in that, in general, each has various administrative
responsibilities for a given assessment year. In addition, the county
recorder records various real estate documents, including subdivision
plats, mortgages, surveys, and conveyances such as deeds, etc. |
|
Q.
How
can I change the address where my tax bill is mailed? |
| The procedure for changing the mailing addresses for tax bills will
vary from county to county. Contact your county treasurer to determine
what you need to do. |
|
Q.
How
can I see a plat map or an aerial photo of my property? |
| Some counties have their parcel maps and aerial photographs
available on the Internet. Find a link to the specific county website
that has this information. |
|
Q.
What are the real estate responsibilities of the county auditor?
|
While practices vary between counties, in general the county auditor has
the following statutory responsibilities:
- Apply Equalization Rates by property class and assessor jurisdiction
to calculate equalized 100% Actual Values in odd-numbered years
- Apply annual Rollback Rates by property class to calculate Taxable
Values
- Enter state-certified values for utilities and railroads for taxation
- Administer Tax Districts, TIF Tax Districts, and SSMID Districts such
that taxpayers pay the correct amounts and governmental authorities
receive the correct amounts
- Calculate and certify base value and increment value in TIF Tax
Districts
- Certify Taxable Values to cities, schools, townships, and other
governmental bodies for use in preparing annual budgets
- Review and certify the budgets of cities, schools, townships, and
other governmental bodies for compliance with tax rate limits
- Certify annual Consolidated Tax Levy Rates by Tax District
- Calculate and certify taxes to the county treasurer for collection
- Calculate and certify drainage assessments to the county treasurer for
collection
- Maintain the official county plat books and transfer books, and enter
ownership name changes for taxation and assessment
- Certify amounts Military Exemption, Homestead Credit, Ag Land Credit,
and Family Farm Credit to the state |
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| Credits and Exemptions |
|
Q.
What is a Homestead Credit? |
The Homestead Credit is a tax credit funded by the State of Iowa for
qualifying homeowners, and is generally based on the first $4,850 of Net
Taxable Value. In the case of a Disabled Veteran Tax Credit, the value
of the Homestead Credit is increased to the entire amount of the
Taxable Value of the property. |
|
Q.
How is the Homestead
Credit calculated? |
| The Homestead Credit is calculated by dividing the homestead credit
value by 1,000 and multiplying by the Consolidated Tax Levy Rate. That
amount may then be reduced by the county to the same amount at which the
State of Iowa has approved funding. |
|
Q.
What is a real estate
Military Exemption? |
| Veterans who served in active duty during certain periods of time
and who were honorably discharged are eligible to receive a Military
Exemption on their property taxes. Pursuant to Iowa law, the Military
Exemption value is determined by the dates the veteran served in active
duty. Values for most veterans are $1,852, or $3,704 in the case of a
husband and wife who both qualify. The value for World War I veterans is
$2,778. |
|
Q.
How is the Military
Exemption calculated? |
| The Military Exemption value is subtracted from the Taxable Value of
a property prior to the calculation of taxes. To know how much your tax
bill was reduced by the Military Exemption, divide the value by 1,000
and multiply the remainder by the Consolidated Tax Levy Rate. |
|
Q.
How do I apply or find out if I qualify for the Homestead Credit or
Military Exemption? |
| Your local assessor has forms that you need to complete, sign, and
file for the Homestead Credit and/or Military Exemption. That office can
also tell you the qualifications for each. |
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| Understanding a SSMID District |
|
Q.
What is a SSMID District? |
| A “self-supported municipal improvement district” is informally
referred to as a SSMID District. Generally, it is an area of contiguous
property within a city – often in the downtown area – either zoned for
commercial or industrial purposes or a duly designated historic
district. |
|
Q.
How does a SSMID District
work? |
| A tax levy is imposed on property within the SSMID District in
addition to all other tax levies. The added revenues can be used for
improvements to the District, administrative fees, and debt for the cost
of improvements. |
|
Q.
Can the property owners within a proposed SSMID District oppose its
establishment? |
| Yes, if 25% of property owners with 25% of the value within the
proposed SSMID District file written objections, a unanimous vote of the
council is required. If 40% of the property owners with 40% of the value
object, establishment of the District is abandoned. |
|
Q.
How does the SSMID tax levy affect other taxpayers and Levy Authorities? |
| Only property owners within the SSMID District pay the additional
tax levy. The District neither positively nor negatively impacts other
Levy Authorities. |
|
Q.
How much is the SSMID tax
levy rate? |
| The SSMID tax levy rate is determined as part of the petition and
ordinance process. The law sets no minimum or maximum rates. |
|
Q.
Is the tax levy rate the same for all properties within the SSMID
District? |
| Yes, unless the city ordinance creating the SSMID District divides
it into two or more zones, or if another special Levy Authority
overlapped part of the SSMID District. |
|
Q.
How is a SSMID
District amended or dissolved? |
| Procedures for amending a SSMID District are generally similar to
those for creating one. A District can be dissolved by a rescission of
the ordinance by the city council. However, dissolution would not
necessarily eliminate a levy for any outstanding debt for the District.
|
|
Q.
What
happens when a SSMID District overlaps a TIF Area? |
| The SSMID District acts as the other regular Levy Authorities in the
TIF Area, in that the TIF takes part of the SSMID tax revenues. The
amount depends on the proportion of the base and increment values in the
TIF Area, as well as the amount of TIF debt. |
|
Q.
Who decides on construction of improvements in the SSMID District?
|
|
A petition initiates the process. The signature requirements and
approval steps are similar to that of establishing a SSMID District. |
| (back to top) |
| Understanding Rollback Rates |
| Q.
What is the Rollback Rate? |
| The Rollback Rate is an annual statewide rate set annually for each
property class by the Iowa Department of Revenue. In effect, the rate of
growth in value for a given property class may be limited by the rate of
growth in value of another property class. Somewhat similar to two
people tied together in a three-legged race, neither property class can
get too far ahead of the other one.
|
|
Q.
How is Taxable Value
calculated? |
| Taxable Value for most property is calculated by multiplying the
Rollback Rate for the correct property class by the equalized 100%
Actual Value. Taxable Value for gas & electric utility property is
calculated by the Iowa Department of Revenue. |
| Understanding Tax Districts |
|
Q.
What is a Tax District? |
| Generally, a Tax District is a geographically contiguous area
defined by boundaries of schools, townships, and cities when overlaid
with one another. As such, it is a contiguous area within which the Tax
Levy Rates are the same for all parcels. |
|
Q.
How is Taxable Value
calculated?
|
| One exception is agricultural land within an incorporated city. City
ag land is subject to a different Tax Levy Rate limit than other
Property classes within a city, and ag land parcels are assigned to a
separate city ag Tax District. The result is that the various ag parcels
within a city ag Tax District do not have to be geographically
contiguous. Another exception is the way that that some residential
properties are administered in a SSMID District. |
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| Understanding TIF Areas & TIF Taxing
Districts |
|
Q.
What is a TIF Area? |
| A tax increment financing area (TIF Area) is usually created by a
city or county for use as an economic development tool. A community
college can also create a TIF Area for a new jobs training program. |
|
Q.
What is the difference between a TIF Area and a TIF Tax District? |
| A TIF Area is defined in the ordinance adopted by the city or
county. A TIF Area may need to be broken into multiple TIF Tax Districts
because of different Consolidated Tax Levy Rates or due to an amendment
to the TIF Area, such as happens in an annexation. |
|
Q.
How is a TIF Area created?
|
| A city or county must adopt an urban renewal plan and then an
ordinance for the division of TIF taxes. The process prescribes public
notice and public hearing requirements. |
|
Q.
How do taxes in a TIF Area
work? |
| Taxes in a TIF Area are split between the “base” and the “increment”
values. Base value is generally described as the existing value before
the TIF Area was created. Increment value is generally described as the
growth in value after the TIF Area was created. |
|
Q.
What happens to the “base” taxes and the “increment” taxes? |
| Taxes levied on the base value are distributed by the county
treasurer to the Levy Authorities in the same manner as regular
(non-TIF) Tax Districts. Taxes levied on the increment value are paid to
the TIF Authority. |
|
Q.
Who is the “TIF Authority”? |
| The TIF Authority is the governmental body that created the TIF
Area. Usually a city, it could also be a county, a community college, or
a rural improvement zone. |
|
Q.
How much of my taxes go to the city (or county) for debt for the TIF
Area? |
| The amount of increment taxes depends on the relative proportion of
base value to increment value in the TIF Area, and also on whether or
not the TIF Authority requests all of the available TIF increment taxes
in a given year. You can see the distribution of your taxes on your tax
bill. |
|
Q.
Do all of the taxes on the increment value go to pay TIF debt? |
| No. Debt levies for counties, schools, and cities are applied
against both base and increment value, as are physical plant and
equipment levies for school districts. |
|
Q.
Are
my taxes higher because my property is in a TIF Area? |
To answer this question, it is useful to assume a situation in which two
real estate parcels are exactly the same in the following respects: each
has the same valuation, Property Class, tax credits & exemptions, and
Consolidated Tax Levy Rate. The only difference between the two is that
one is in a TIF Area and the other is not.
The result is that both properties will pay exactly the same amount of
taxes. The difference in a TIF Area is not how much you pay in taxes,
but who receives the taxes. |
|
Q.
What qualifies to be paid from taxes on the increment value? |
| TIF tax revenues are used to repay debt incurred for qualifying
urban renewal projects within a TIF Area. Projects are for the purposes
and activities listed in Code of Iowa Sections 403.6 or 403.12 and
should also be included in city’s urban renewal plan. TIF debt for an
urban renewal project can take the form of rebate agreements, internal
loans, general obligation bonds, or TIF revenue bonds. |
