- What do assessors do?
- What don't they do?
- How does an assessor value property?
- What is the role of the Iowa Department of Revenue and Finance?
- What is equalization?
- What causes taxes to increase?
- I signed up for Homestead and/or Military last year. Why isn't it on my taxes? Do I need to sign again?
- Doesn't the Assessor raise my value according to the amount of taxes needed?
- I disagree with my value. What can I do?
- I paid xxxxx dollars for my house. Why isn't it assessed for that?
- The assessed value of my house should be less than what I would sell it for?
- I own and farm 500 acres. Isn't there something I need to sign up for now?
- I signed up for Forest Reserve. Do I have to sign up every year?
- What is Forest Reserve exemption?
- My house is in the country and I have 7 acres. Why aren't I classed as agricultural?
- My building that I use as a repair shop is in a residential area and zoned as residential. Why is it classed as commercial?
- To whom should I direct questions relating to taxes?
- What is the difference between "assessed value" and "taxable value"?
An assessor's primary duty is to assess all real property, which includes residential, commercial, industrial and agricultural. The Iowa Department of Revenue and Finance assesses public utilities and railroads. County and city assessors are not employees of the State or of the Iowa Department of Revenue and Finance.
- Collect taxes
- Calculate taxes
- Determine the tax rate
Residential, commercial and industrial real estate is assessed at 100% of market value. The assessor must determine the fair market value of the property. To do this, the assessor generally uses three approaches:
Agricultural real estate is assessed at 100% of productivity and net earning capacity value. The assessor considers the productivity and net earning capacity of the property. Agricultural income as reflected by production, prices, expenses, and various local conditions is taken into account.
- Market Approach: Find properties that are comparable to yours which have sold recently. Analyze sales of similar properties that were recently sold. Determine the most probable sales price of the property being appraised.
- Cost Approach: Estimate how much money at current labor and material prices it would take to replace the property with one similar to it. Useful when no sales of comparable properties exist.
- Income Approach:If the property produces income, such as with an apartment or office building, estimate its ability to produce income.
The Iowa Department of Revenue and Finance assists local governments in making property tax assessments fair and in compliance with the law. It does not collect or use property taxes.
- It administers an examination which would-be assessors and deputy assessors must pass.
- It issues equalization orders to county auditors every two years for classes of property.
- It provides technical assistance and educational programs for assessors and members of boards of review.
- It issues regulations on assessors, conference boards and boards of review.
- It assesses all utility and railroad properties
- It administers credits and exemptions to property owners.
- It has general supervisory authority over the operation of the assessors offices and the boards of review.
The Iowa Department of Revenue compares the assessors' abstracts to a "sales assessment ratio study" it has completed independently of the assessors. If the assessment (by property class) is 5 percent or more above or below the sales ratio study, the department increases or decreases the assessment. (There is no sales ratio study for agricultural and industrial property.) Equalization occurs on an entire class of property, not on an individual property. Also, equalization occurs on an assessing jurisdiction basis, not on a statewide basis. Equalization is important because it helps maintain equitable assessments among classes of property and among assessing jurisdictions. This contributes to a more fair distribution of state aid, such as aid to schools. It also helps to equally distribute the total tax burden within the area.
Basically, three variables must interact to decrease or increase your property taxes:
Your taxes increase if...
- The combined budgets of the taxing authorities
- The total value of all the property in the taxing unit
- The value of your property
Your taxes decrease if...
- The budgets increase and the value of all properties remain the same.
- The bugets and value of property in the entire government unit remain the same but the value of the individual's property increases.
- The budgets and value of the individual's property remain the same but the value of the property in the entire government unit decreases.
Why might you pay higher taxes than your neighbor?
- The budgets decrease and the values of all properties remain the same.
- The budgets and value of property in the entire government unit remain the same but the value of the individual's property decreases.
- The budgets and value of the individual's property remain the same but the value of the property in the entire government unit increases.
The value of a house depends on land size, square footage, type of construction, age, quality, location, story height, and condition, but that's not all. Your neighbor's property may be taxed by different taxing districts than you are. For instance, districts are often divided by highways. If our neighbor's property is across the highway, it may be taxed by different districts than you are. Also, credits and exemptions such as Homestead, Ag Land, and Military could make a difference.
It will depend on when you signed the application. Applications must be signed on or before July 1st of the assessment year that you are first claiming the credit. If it is signed after July 1st, the credit is applied to the next assessment year.
Please remember that property taxes due are 18 months behind the current assessment year. Example, the current property taxes payable in September 2009 and March 2010 are calculated on the 2008 assessment year and values. If you signed up after July 1, 2007 but on or before July 1, 2008, your credit will be applied to the 2008 assessments on which the taxes will be calculated for the September, 2009 and March, 2010 payments. If you signed up after July 1, 2008, your credit will be applied to the 2009 assessments, which will be used for the September, 2010 and March, 2011 property taxes.
Homestead and military credits were at one time applied for every year. In the mid 1980's, this was changed to a one-time sign up. However, you do still have to sign up if you move to another house, even if it is next door or across the street.
No, the Assessor raises or lowers the values of property according to the market value of real estate or in the case of agricultural land, according to productivity and CSR.
Assessments are set January 1st of each year, while the tax levies (tax rates) on these assessments are not set until July of the following year. Example, the assessment notices from April 2009 were for the January 1, 2009 assessment. Tax levies for these values will be set in June of 2010 based on what the different taxing authorities budget in March and April 2010 for the next fiscal year of July 2010 - June 2011.
The taxing authorities you pay property taxes to are listed at the bottom of your tax statement each year, along with their budget information and a breakdown of how much you are paying to each taxing body.
I would first recommend either looking at your property information on our Montgomery County Assessor website (www.montgomeryassessor.org), or contacting our office, to see if we have everything listed correctly for your property. We will gladly provide a printout on your dwelling and/or buildings and explain how your value was determined. The Montgomery County Assessor's Beacon website is also a good place to find out how other comparable properties have sold.
If you still disagree with your value, you may file a petition with the Montgomery County Board of Review. Petitions are available in the Assessor's Office or the Iowa Department of Revenue website. Petitions must be filed within the time provided by the Code of Iowa. This is currently April 16th to May 5th of any given year. The petitions are to be filed in the Assessor's Office.
The Board of Review will meet during the month of May. You may decide to have an oral hearing before the Board, or only decide to file your petition and submit any information you think is relevant to your petition. The Board will notify you by mail of their decision.
If you disagree with their decision, you may appeal within 20 days of the Board's adjournment, or May 31st, whichever is later. This date is usually May 31st. You may appeal to either the Property Assessment Appeal Board, or to Montgomery County District Court.
With the exception of agricultural land, real estate is assessed at current market value. The current market value for assessments are established every odd numbered year and based on actual sales from the previous year. The Assessor's Office looks at all arms-length sales in the County, in a particular town, and of a certain building style to determine assessment for a number of properties at once.
An individual property may sell higher or lower than the assessed value for a number of reasons. There may have been a change in the property since our office last inspected the property. The change could have been something that would raise or lower the value.
These changes could include such things as a new garage or addition, a deck, new siding or windows, a garage or deck removed, or the overall condition of the dwelling has depreciated beyond what it would normally. Sometimes, one may be willing to pay more for a specific feature in a particular property, or the seller may be willing to sell it for less to reduce their worries and maintenance costs. There are also characteristics of a property which may affect the market value, but are not assessed, such as landscaping or personal property included in the sale.
Assessed values are to be at 100% fair market value. Your assessment should be near what you could expect to sell it for in the current market. As stated above, there could be a number of factors that would affect your sale price compared to your assessed value.
You are probably thinking of the Family Farm Tax Credit. This was required to be signed up for every year by October 15th until the year 2001. If you signed up in 2001 or after, you do not have to sign again. However, if you have acquired more agricultural land after you last signed up, you will need to sign an application for the newly acquired land. Applications can be filed anytime. However, those filed after November 1st will be applied to the next year.
No, this is a one-time sign up and need not be applied for again. The property will be checked periodically to verify that it continues to meet the program requirements and continues to qualify.
The forest reserve exemption was enacted by the legislature to promote the need to keep timber areas in the state. To be eligible, the property must be at least 2 acres and contain at least 200 growing trees per acre. If any buildings are within the area claimed for exemption, one acre for the building site will remain taxable.
Livestock is not allowed on the property. This includes cattle, horses, mules, sheep, goats, or hogs. The property would not qualify, or would cease to receive the benefit of the exemption. It may also be subject to a recapture tax.
There can be no economic gain on the property claimed for exemption other than raising trees. Up to one fifth of the trees may be removed as long as the total trees per acre does not go below the required 200, or enough trees are re-planted to stay above this. The receipt of compensation from the federal government is not acceptable economic gain for forest reserve exempted property. The property would not be eligible or would cease to receive the exemption if other economic gain is being received. It may also be subject to recapture tax.
If a property ceases to be eligible, it shall be assessed for taxation and subject to the recapture tax. The property shall be subject to taxation for the current year. In addition, the property is subject to taxation for each of the five preceding calendar year for which it was exempted. However, if the same person, or their direct descendents or antecedents, have owned the property exempted for at least 10 years, it shall not be subject to recapture tax.
A problem might occur when a property is for sale that has some forest reserve exempted ground, which could cause the buyer to pay the recapture tax. If the buyer is unaware that some of the ground is in exemption, they might decide to clear the trees. If they do, the exemption would cease and they would be responsible for the recapture tax. Our office suggests, if the buyer is unsure if they want to keep the forest reserve exemption or not aware of the exemption, that the seller sign a statement requesting that the exemption be removed. The new owner can sign a new application if they wish it to remain in the forest reserve exemption.
Iowa legislators have enacted statutes that determine how a property is classed and assessed. Current statutes state that property is to be classed according to its current and primary use. A property's location or zoning does not determine classification for assessment. Agricultural real estate includes woodland, wasteland, and pastureland, but only if held in conjunction with other agricultural real estate.
A house on x number of acres with the primary use of the property is to live there, will be classed as residential. This would include properties with an out building, which might have a horse or two, or a couple of cows, or mow a couple acres to sell hay bales. These uses would be incidental to the primary use of the property as a residence. Agricultural classifiation of small parcels is appropriate when they are the site of an intensive livestock use which demonstrates intended agricultural profit. Agricultural classification is also appropriate when they are adjacent to and operated as part of a larger farming operation.
This would differ from a house on 40 acres with 30 acres of cropland and 200 hogs. Even though the house is their primary residence, the primary use of the overall property is agricultural.
A building being used as a business will be classed as commercial, even though it may be in a residential area or zoned residential. Again, it depends on the primary use of the property.
If a property has a building being used as a repair shop business, and there isn't a house, this will be classed as commercial. However, if they discontinue the business and use the property for personal storage or use, then it could be re-classed as residential.
A house would be classed as commercial if used primarily for business purposes, or has 3 or more apartments. However, if someone is using a room or two in the house for a business, i.e. beauty shop, insurance office, etc., and lives in the rest of the house, this would be classed as residential.
The only time location and zoning may help determine classification is when there is a vacant lot, which isn't owned by and adjoining or adjacent building owner.
These should be directed to the Montgomery County Treasurer.
Assessed value and taxable value are not synonymous terms.
Property is assessed as of January 1st. Property is re-assessed every two years in the odd numbered year.
Taxes are levied on a value determined by the Auditor by applying a "rollback" percentage to the assessed value and deducting any applicable exemptions or credits. This is considered the taxable value. The "rollback" percentages vary each year.
On values determined as of January 1st, one does not start to pay taxes until 18 months later.