One of the key aspects of the property tax system in Iowa is how properties are assessed and valued. Cities, counties, schools and other taxing authorities set tax rates based on the property valuations in their respective districts, and property owners pay taxes based on those rates and the valuation of their property. While the property tax system can be complex, it is clear that property assessments are an important piece to the puzzle. Along with that, property owners have the right to appeal their assessments, which can be a confusing process.
All real property in the state is assessed every two years in odd-numbered years, except railroad and utility property which is assessed by the state each year. Residential, commercial and industrial properties are assessed on 100 percent of their market value. To arrive at the value, assessors generally use three approaches – the market approach, which looks at comparable property sales; the cost approach, which estimates how much it would cost to replace the property; or the income approach, which estimates a property’s ability to produce income, such as an office building. Agricultural property is assessed at 100 percent of its productivity and net earning capacity.
County and city assessors use these methods to arrive at a property’s “assessed value”, which is the valuation used for tax purposes. Assessors then send valuation reports to the Iowa Department of Revenue, which is required to complete an equalization every two years. Equalization is a process that reviews property assessments and sales assessment ratio studies, which compare property sale prices to assessed values. If assessments in a property class are 5 percent more or less than the sales ratio study, the state increases or decreases assessments to help maintain equitable assessments across property classes. The statewide assessment limitation, or rollback, is then applied to each property class as stipulated by state law to determine taxable values.
Assessors must complete property assessments and notify taxpayers by April 1. Taxpayers are provided a window to file an assessment appeal to their local board of review.
Property Assessment Appeal Process
Any property owner, taxpayer or public official may appeal a property assessment. The initial appeal must be filed with the local board of review between by April 30 of the assessment year. Under Section 441.31 of the Code of Iowa, local boards of review can be made of three or five members serving six year terms. As nearly as possible, boards are to include one licensed real estate broker and one registered architect or person experienced in the building and construction field. For county boards of review, at least one member must be a farmer.
A city council of a city having a population of 75,000 or more which is a member of a county conference board may provide, by ordinance, for a city board of review to hear appeals. The members of the city board of review shall be appointed by the city council. The city shall pay the expenses incurred by the city board of review. However, if the city has a population of more than 125,000, the expenses incurred by the city board of review shall be paid by the county. If a city having a population of more than 125,000 abolishes its office of city assessor, the city may provide by ordinance for a city board of review or request the county conference board to appoint a 10 member county board of review.
Boards of review are to hold regular sessions May 1 to May 31 each year. They may meet as much as needed to complete its work in a timely fashion and may adjourn prior to May 31 if no other work is to be done. Extensions can be requested if a board is unable to complete its work before the end of the session. The primary responsibilities and powers of boards of review are:
- Act upon any and all protests filed by taxpayers or taxing districts.
- Review and equalize assessments established by the assessor.
- Add to the assessment rolls any property omitted by the assessor.
- Add to the assessment rolls for taxation any property which the board believes has been erroneously exempted from taxation. Revocation of a property tax exemption shall commence with the assessment for the current assessment year, and shall not be applied to prior assessment years.
- Subpoena witnesses and administer oaths.
Grounds for Appeal
Code Section 441.37 details the grounds for appeal:
- The assessment is not equitable as compared with assessments of other like property in the taxing district.
- The property is assessed for more than the value allowed by law.
- The property is not assessable, exempt from taxes or is misclassified.
- There is an error in the assessment, which shall be stated specifically.
- There is fraud in the assessment, which shall be stated specifically.
- For even-numbered assessment years, property that has not been reassessed in that even-numbered year which had a decrease in value from the previous reassessment year.
In addition to these grounds for appeal, property owners who find a clerical or mathematical error has been made in their assessment may file a protest (including for previous years). Upon the determination of the board that a clerical or mathematical error has been made, the board shall take appropriate action to correct the error and notify the county auditor of the change in assessment as a result of that error. The board may correct clerical or mathematical errors for any assessment year in which the taxes have not been fully paid or otherwise legally discharged.
Appeals must be submitted in writing using proper forms and signed by the individual making the protest or by his or her duly authorized agent. Electronic appeals may be filed if authorized by the local board of review. The board shall give written notice to the protester of its decision and specify the reasons for action taken by the board.
State Property Assessment Appeal Board
Property owners, taxpayers and public officials dissatisfied with a local board of review decision can appeal to the district court or the Property Assessment Appeal Board (PAAB), which is a three-member panel appointed by the Governor that holds hearings on assessment appeals from around the state. Protesters must file a PAAB Notice of Appeal & Petition Form with the secretary of the PAAB, and the form must be postmarked within 20 days of the adjournment of the local board of review or May 31, whichever is later. Appeals can also be emailed to the PAAB before the end of the filing period.
Similar to the boards of review, the PAAB will review properly filed appeals and must send a written decision to the protester. Protesters may appeal a PAAB decision to the district court within 20 days after the letter of disposition of the appeal by the PAAB is postmarked to the appellant.