This past spring the Iowa legislature passed, and the Governor signed, into law Senate File 295. This law involved a number of changes to the property tax system, especially for commercial and industrial property. This includes: a business property tax credit, rollbacks for commercial and industrial property, a new multi-residential classification, changes the allowable growth between agricultural and residential from 4% to 3%, provides a telecommunications company partial exemption, and makes changes to the Property Assessment Appeal Board and the appeal process.
The Business Property Tax Credit is a credit against taxes based on valuation for commercial, industrial, and railroad classed property units. It will be deducted from the property taxes owed and shown on the property tax statement, starting in the fall of 2014.
An application must be filed with the Assessor's office to receive this credit. Applications are available at the Assessor's office and the Iowa Department of Revenue website. (www.iowa.gov/tax/locgov/13PTCReform.html) Any applications received after January 15, 2014, will be considered applications for the next year. The deadline for filing for the following years will be March 15.
A person may claim and receive one credit for each eligible parcel unless the parcel is a part of a property unit for which a credit is claimed. Property unit is defined in the law as "contiguous parcels all of which are located within the same county, with the same property tax classification, are owned by the same person, and operated by that person for a common use and purpose." Contiguous parcels are also defined as "a parcels that share a common boundary, b parcels within the same building regardless whether the parcels share a common boundary, and c permanent improvements to the land that are situated on one or more parcels of land that are assessed and taxed separately from the permanent improvements if the parcels of land upon which the permanent improvements are situated share a common boundary." Eligible parcels, or property units, must be classified and taxed as commercial, industrial, or railroad property to qualify for the credit. The Iowa Department of Revenue website also has other information about the new law, including a Question and Answer section (near the bottom of the website referred to earlier) that goes into greater detail on what comprises a unit.
However, there are some properties that are specifically excluded by the law for the credit. These are some properties currently classed as commercial, but will be reclassified to the new multi-residential classification in 2015. These are: mobile home parks, manufactured home communities, land-leased communities, assisted living facilities, and any property primarily used or intended for human habitation containing three or more separate dwelling units. This includes apartment buildings and dwellings converted to 3 or more apartments. These property owners do not need to sign up for anything. The reduction of their tax bills will be through the rollback, and will eventually be the same as the residential rollback.
The Assessor's office has already gone through the commercial and industrial properties, separating the properties that qualify for the credit from the multi-residential properties that do not qualify. We have also analyzed what properties will be combined into a unit, following the Iowa Department of Revenue guidelines. Once a claim has been filed and the credit allowed, there will be no need to re-file the claim as long the property continues to qualify for the credit. If the property ceases to qualify, the owner is required to provide written notice to the Assessor by March 15th. If a property or a portion of the property changes ownership, the new owner must file a new application. If the previous owner keeps a portion of the property, they must also file a new application.
The implementation of the rollback for the commercial and industrial property and the new business property tax credit are the main components of the commercial property tax reform passed by the legislators.
We urge you to contact the Assessor's office as soon as possible. There is a short time frame and this will benefit all commercial and industrial owners that qualify for the credit. The applications need to be in the Assessor's Office by January 15, 2014, in order to receive credit for next year's property tax statements.