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Understanding the New Iowa Property Tax Legislation Part 2: Commercial Property Tax Credit

By Bruce Baker, Dwayne Vande Krol, and Sarah Raaii

This is the second in a series of articles analyzing key sections of recent legislation that significantly changed Iowa’s property tax system. In this post, we address the commercial property tax credit and its impact on commercial property owners.

The new commercial property tax credit applies to property taxes due and payable starting on or after July 1, 2014. When the credit is fully phased in, the tax imposed on the first $145,000 of assessed value of commercial property will be approximately equal to the tax imposed on residential property of equivalent value.  It is estimated that the maximum first year credit will be approximately $523. 

To receive the credit for the fiscal year beginning July 1, 2014, property owners must file a claim with the applicable city or county assessor before January 15, 2014.  These credits will be based upon the assessed value of properties as of January 1, 2013.  For subsequent years, claims must be filed by the March 15 immediately preceding the fiscal year during which taxes for the credit being claimed are due and payable.  Click here for the form to be used when applying for the credit.

One credit is allowable for each qualifying "property unit". A property unit generally consists of a single parcel and contiguous parcels of the same classification owned and operated by the same person for a common use or purpose. Based upon the recommendations of the assessors, the county boards of supervisors will decide whether to allow or disallow claims for credit. One of the more difficult issues is expected to be the determination of what contiguous parcels comprise a “property unit” for which a single credit is allowed. Once a claim is allowed, the property tax credit will not be adjusted for three years. A decision by a board of supervisors to adjust or disallow a credit may be appealed to the state board of tax review. If a claim is disallowed, the property owner may appeal to district court.

Please contact Bruce Baker or Dwayne Vande Krol for further information or assistance regarding the new commercial property tax credit.



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