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How to Successfully Appeal Your 2013 Property Tax Assessment

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The Nyemaster Tax Law Blog is dedicated to current tax law and employee benefit/ERISA issues impacting individuals and businesses, at both the Iowa and federal levels. We hope you find this resource informative and appreciate your feedback.

By Bruce Baker and Dwayne Vande Krol 

Under Iowa law, all real property is subject to reassessment as of January 1 of each odd-numbered year.  Accordingly, by April 15 of this year, city and county assessors throughout the state of Iowa will be notifying taxpayers of the assessed value of their real property for 2013.  If you are a taxpayer receiving one or more of these notices, taking the time to determine whether or not to file an appeal of the assessed value of your properties could ultimately lead to property tax savings for you or your business.  If you decide that the city or county assessor has over-assessed your property, a protest must be filed with the local board of review between April 16, 2013 and May 6, 2013 (because the usual due date of May 5 falls on a Sunday this year). 

The initial step in the process is to evaluate whether your property is over-assessed.  Iowa law requires assessors to assess real estate at its "actual value," which is defined as market value.  In determining market value, Iowa law contains a statutory preference for using the "sales comparison" method, which determines the value of real property based on recent sales of comparable properties.  However, if there are no comparable sales available, market value can be established using other methods, including the "income approach" or "cost method."  The income approach is based on the capitalized income earned from the property, and is best-suited for rental or other income-producing properties.  For rental properties, either the landlord or the tenant is considered the "aggrieved taxpayer" eligible to appeal the assessment.  The cost approach is based on the estimated cost to build a similar property, generally based upon published costs of building materials and other construction industry standards. 

Contacting the assessor to discuss your assessment either before or after filing a protest may be productive.  In preparing for such discussions, it is important to review the assessor's records for the property, the assessor's records for comparable properties, recent appraisals, income statements and the like.  Obtaining outside expert assistance may also be valuable in evaluating the assessment.  While time and cost considerations often restrict full appraisals prior to filing a protest with the local board of review, a limited scope expert consultation can help frame the case and evaluate the likelihood of a successful protest. 

All protests to the local board of review must be in writing, must state the specific grounds upon which the protest is based, and must be signed by the taxpayer or the taxpayer's authorized agent.  A written request for an oral hearing must be made at the time of filing the protest and may be made by checking the appropriate box on the form prescribed by the assessor.  Unfavorable decisions of the local board of review may be appealed to the Iowa Property Assessment Appeals Board or to District Court. 

There are numerous complexities in Iowa's property tax appeal process, including determining the appropriate grounds upon which to base the protest and developing sufficient evidence to support a lower assessed value.  A recent case decided by the Iowa Court of Appeals illustrates the importance of applying a proper valuation approach. In Homemakers Plaza v. Polk County  Bd. of Review, Case No. 2-972 (Iowa Ct. App. Jan. 9, 2013), the property owner argued that the assessor improperly considered the special use attributes of its retail furniture store in violation of Iowa Code section 441.21, which prohibits assessors from considering the special value or use of  property to its owner in valuing the property. The court held that the special use exclusion under section 441.21 is narrowly construed and upheld the district court's determination that the highest and best use of the property was its current commercial use, rather than industrial use as argued by the property owner. Reliance on the wrong highest and best use, plus other flaws in their reports, led the court to reject the testimony of the property owner's experts. 

Please contact us if we can be of assistance in reviewing or protesting your 2013 Iowa property tax assessments.



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