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Iowa Implements Tax Reform

by Morgan Thomas, Chicago, December 2013


The first phase of tax reform legislation approved earlier this year is being implemented in Iowa. It has several provisions that will benefit commercial and multi-family property owners.


Assessment Rollback


Senate File 295 rolls back the taxable value for commercial and industrial property to 95% of its assessed value for 2013.


In 2014, the taxable value will be reduced another 5% to 90% of assessed value.


Tax Credit Phased In


The new law phases in a tax credit for business property. The first year of the new credit (2013 payable in September 2014 and March 2015) is based on approximately $33,000 in taxable value with an estimated credit per property of about $500, according to the Department of Revenue. Applications for this credit must be filed with the local assessor by January 15, 2014.


The credit eventually allows companies to pay the residential rate on the first $145,000 of their property's value by fiscal year 2017.


New Multi-family Tax Classification


SF 295 creates a new multi-residential property tax classification to reduce taxes for apartments, assisted living centers, mobile home parks, and other properties primarily intended for human habitation, which are currently taxed at commercial rates.


The new classification goes into effect on January 1, 2015. The rollback starts at 86.25% and gradually declines to equal the residential rollback percentage as of January 1, 2022 and thereafter.


Tax Rates Must be Set


Actual tax liabilities based on the 2013 values are payable in fiscal year 2014-15. They will be determined after local taxing bodies establish their budgets early next year.