- Updated anwsers added to Sections 4, 7, & 10 on 8/13/14
- Updated Response on Eligibility of Mineral Rights effective 4/25/14
- Questions have been organized into topics.
- New questions are added at the top of each area.
Click on the topic below to see Questions and Answers.
New items are added at the top of each listing.
4. Commercial - updated response to 4.2b added 8/13/14
7. Dwellings - updated responses to 7.6, 7.10 & 7.11 added 8/13/14
10. Multi-Residential - updated response to 10.1 added 8/13/14
1.3: On the line for Year Applicable - should the year be 2013 (which is the year of the assessment)? On the line for Jurisdiction - should we list both the City and County for property located within the city limits? When three parcels are located next to each other, but have different addresses, should I complete one form for each address or should I show the different addresses on one form? Thank you for any clarification you can give me. I reviewed your frequently asked questions, but did not find answers to my questions
Response: The first year of the applications would be for the 2013 assessment if timely filed and received by the city or county assessor's office by January 15th, 2014.. If the property is located in a county that has both a city and county assessor the application is presented to the county or city assessor whichever is applicable for your properties. If you are uncertain if the parcels comprise one unit you should apply for each parcel separately. If the properties meet the definition of a unit one application is sufficient list all three parcel numbers rather than addresses.
1.2: What is the first year one can claim?
Response: 2013 assessment taxes due and payable 2014/15
1.1: The first year for commercial, industrial and railroad rollback begins with the 2013 assessment for taxes due and payable 2014/15.
2.9: We have mailed our applications. If a property transfers ownership and we already have an application submitted by the seller does the new buyer need to file again by January 15th, 2014? If so, Isn’t that a new form that we do not have yet?
Response: You are correct. We are developing a reapplication now. It will be available before January 15th, 2014.
2.8: Application should ask what the property is used for.
Response: The application for is completed and no further revisions are planned at this time. The assessor is not prohibited from sending an additional questionnaire to property owners.
2.7: Can you put a spot on the Business Property Tax Credit application for how the building or unit is used?
Response: No, the application is finalized. An assessor may send a questionnaire with the form if they choose to mail applications to taxpayers.
2.6: Two questions from same Assessor:
A: Owners and agents are already filing applications. On the property address line, they are indicating the physical address. When we print an application for another owner/agent in our office (for mailing), the property address line is being populated with the mailing address. Why does the line indicate property address and the software people indicate the Department said this line must contain the mailing address?
Response: The property address line on the application form is intended for the property address.
B: Same scenario.. The mailing address will only print 2 lines. Some of the Auditor’s addresses are 4 lines, example, name, in care of, p o box and city, state, zip. We are planning to send applications to those who have not filed and those who we do not find on site (vacant buildings, etc.). When we mail, if there is no physical property address, how does the agent know which parcels are listed on the application? Most agents have multiple clients and do not track parcel numbers (Cell towers, property managers, etc.)
Response: The property address line on the application form is intended for the property address. The parcel lines are intended for parcels included in the application.
2.5: I am asking for an indication on the form about Jurisdiction. People are asking “What do we put for jurisdiction.” Is there some way to put this in the instructions when filling out the form what goes there? Like “your jurisdiction is your county” or something to that affect. Thank you!
Response: The jurisdiction is the county or city, where city assessors are located.
2.4: Where do we get the form for the Business Property Tax Credit talked about in Iowa Code Chapter 426C?
Response: The form is available from your local assessor or through the department's website. http://www.iowa.gov/tax/locgov/54-024.pdf
2.3: I just received the Iowa Bulletin regarding Business Property Tax Credit Implementation. Does this new credit apply to Tangible Property as well?
Response: The credit applies to qualified commercial, industrial and railroad classed property taxed and assessed at the local level for property tax purposes that is not primarily used or intended to be used for human habitation containing three or more dwelling units.
2.2: The back of the form says the filing date is January 14, 2014, the front of the form says the filing date is January 15, 2014, which is correct?
Response: The form was corrected on 10-8-13 to say January 15th, 2015.
2.1: Depending on the correct date from the previous question, are applications that are post marked on that date still considered acceptable?
Response: Applications must be received in the assessor’s office as of January 15th, 2014 for the first year or March 15th in subsequent years if reapplication is necessary due to ownership changes, or transfers.
3.8: I had an owner wanting to apply for the business property tax credit on a parcel of land with some storage units and also has a BLL on that parcel. Land and Storage units in name of Randy Tigges. BLL in name of General Rental. Is this one Credit or Two???
Response: I have copied the information directly from the Assessor Presentation at the ISAC workshops on 11/14/2013. Please refer to the presentations for more information.
426C.1 & 426C.4 Business Property Tax Credit
What is a Unit?
- Within the same county
- Same classification
- Same ownership
- Separate item on tax list
- Operated by that “person” for common use and purpose
- Contiguous parcels: share common boundary
- within same building or structure, regardless of boundary
- BLL’s are contiguous as long as the land upon which they sit is contiguous regardless of the land ownership
Based on the information in your question, you have two separate items on the tax list and they are in two different ownership names. As you can see from the definitions found in the language of the law as well as the presentations a unit must have the same ownership. Therefore, in your example there are two units which each qualify for a credit, resulting in two credits.
3.7: Two cell towers, NW corner of county & SE corner of county, would this be one unit?
Response: No. For property to be a unit the parcels must be classified the same, be in the same ownership, not be used primarily for human habitation and be contiguous. In your example the cell towers could not be contiguous.
3.6: Are the wind turbines included in this business property tax credit? They already are specially assessed by an ordinance.
Response: Property classed as commercial, industrial or railroad may qualify for the credit as long as the other requirements are met. Wind turbines were not specifically excluded and therefore if they are classed as either commercial or industrial they will qualify for the credit.
3.5: What about a billboard in a pasture? Does it qualify?
Response: The criteria for qualification are clarified in section A of the questions and answers.
3.4: If cell towers are on the top of a city owned water tower, but they are assessed, does each cell tower company receive a tax credit. Also how is a cell tower considered contiguous?? Through the air waves??
Response: Each tower assessed as a separate item on the tax list, owned by a person and operated for a common use and purpose, classed commercial or industrial may qualify for the credit. Cell towers sharing a common boundary are considered contiguous.
3.3: If A leases land to X and X constructs a building on the land, are A and X entitled to file separate Applications?
Response: If A and X comprise separate items on the tax list and all other qualifiying criteria are met each is entitled to the business property tax credit if applications are received timely.
3.2: Also the answer to A10, how does that relate to A7e, f & g, they make no mention of who owns the cable?
Response: Please refer to A7. The underground or overhead cable does not constitute contiguity.
3.1: Would cell towers on leased land be eligible for the tax credit?
Response: 426C.4 see A2 for classifications that qualify for the business property tax credit. If the cell tower is classed and taxed as commercial, industrial or railroad property it can qualify for the credit as long as the property is a separate item on the tax list.
4.14: We have a medical clinic that has a single apartment within the building. The clinic portion of the property is tax exempt, but the apartment is taxable. Does the property qualify for the BPTC credit for assessment years 2013 and 2014? The only taxable portion will be multi-residential for the 2015 assessment year.
Response: See responses for Q & A 7.15 and 7.11. Property primarily used or intended for human habitation containing three or more separate dwelling units is not eligible for the business property tax credit. Commercially classed property that is less than three units qualifies for the credit until the 2015 assessment, at which time it would be reclassified as multi-residential.
4.13: We have commercial warehouses divided into four units for each building. There are 34 physically separate buildings of four units each in this one condominium regime. If a property owner has three units in three different buildings, will they just get one credit divided among the three because they are contiguous through the condominium regime? Assuming the owner is just a landlord and rents out all three.
Response: Please refer to Q & A A7 for the definition of contiguous. Senate File 295 defines parcels within the same building or structure regardless of whether the parcels share a common boundary as contiguous. The language does not define contiguous through a condominium regime. You have described ownership of parcels that are in separate buildings. Therefore based on your description these parcels do not meet the definition of contiguous. As a result there appears to be three units in your example.
4.12: Is a renter/lessee eligible for the business property tax credit for an industrial or commercial building that they rent and pay the property taxes for as part of their lease agreement?
Response: This question has been answered under question 4.5.
4.11: If a commercial or industrial use is required, how does a vacant lot qualify for the business property tax credit?
Response: The qualification is based on being commercial, industrial or railroad classification and excludes those uses specifically identified in the statute as primarily used for human habitation.
4.10: Commercial parcel qualifies as an owner occupied business. The person who filed just purchased it last week, so my html worksheet does not show this person as the owner. Recommend for allowance?
Response: 426C.3 A person may apply for the credit. If a prior credit application has been received and approved, reapplication by the new owner is required for the property unit to be entitled to the credit. 426C.3(7).
4.9: If a parcel was classed Commercial for 2013, but changed to Residential for 2014, does the property qualify for the 2013 BPTC?
Response: The classification of property used to determine eligibility for the credit under this chapter shall be the classification of the property for the assessment year used to calculate the taxes due and payable in the fiscal year for which the credit is claimed.
4.8 regarding question 4.4: I do not feel that you actually answered this question:
Two store fronts owned by same person, owner operates a business at one and leases the other store front. One credit or two? Your response doesn’t state if they get a credit for 1 parcel or 2 businesses:
Response: It is the assessor’s responsibility to determine common use and purpose and the number of qualifying units. Each separate item on the tax list may comprise a separate common use and purpose depending on the situation and depending on if the parcels are part of the same building. The answer was provided based on the limited information given.
4.7 How will the commercial rollback impact existing Minimum Assessment Agreements? We are assuming there is no “grandfather language” and that the rollback will be applied and applicable for property taxes payable Sept. 14/March 15 even though the agreements were executed prior to the new legislation.
Response: The commercial rollback is applied to the actual, assessed valuation after any applicable exemptions. There is no grandfather language for existing Minimum Assessment Agreements.
4.6: Is farmland a commercial property that qualifies for the credit? I assume it is agricultural and not commercial, so it would be a no.
Response: Farmland that is classed as agricultural would not qualify for the credit.
4.5: If someone owns a building & leases the building & the tenant pays the taxes, is this property still eligible for the Business Property Tax Credit? We have someone who leases sections of his building & the tenant is responsible for paying the taxes, but does not own it – is this eligible?
Response: Parcels that are part of a property unit or an individual parcel that is a separate item on the tax list that is classed and taxed as commercial, industrial or railroad property, that is not primarily used or intended to be used for human habitation is eligible for the credit. The credit is applied to the tax bill as a reduction to property tax. This credit will be identified on the statement as the business property tax credit.
4.4: Two store fronts owned by same person, owner operates a business at one and leases the other store front. One credit or two?
Response: If the properties are two separate items on the tax list and they are classed commercial and not primarily used or intended to be used for human habition, an owner occupied property would be considered a common use and purpose. A leased property is considered a common use and purpose as a landlord.
4.3: What if an owner has 2 units – 1 is a restaurant which is owner occupied and 1 is leased to a cupcake store. If the leased unit, cupcake store, becomes vacant during the year, then does this revert to 1 total unit?? Also do leased properties need to be verified by January 1 of the current year??
Response: If the property is two separate items on the tax list and one is owner occupied property it is considered a common use and purpose. The separate item on the tax list that is a leased property is considered a common use and purpose as a landlord. The assessor’s responsibility is to verify common use and purpose for each item on the tax list for the business property tax credit. A property available for lease would be considered a common use and purpose.
4.2: What about a commercial parcel that contains a rental duplex and a 12 unit mini-storage. Based on the guidelines for multi-res a duplex does not qualify as multi-res, so does it remain commercial since it shares the same parcel as the mini-storage?
a. Response: Beginning with the 2015 assessment, 441.21 subsection 13 a requires that property primarily used or intended for human habitation containing three or more separate dwelling units, and that portion of a building that is used or intended for human habitation and a proportionate share of the land upon which the building is situated, regardless of the number of dwelling units located in the building, if the use for human habitation is not the primary use of the building and such building is not otherwise classified as residential property, shall be valued as a separate class of property known as multi-residential.
b. Updated 8/13/14: You are misinformed that there are guidelines indicating a duplex does not qualify as multi-residential. In the case where there is both commercial use and use that qualifies as human habitation the assessor is required to determine the primary use of the property. If the primary use of the property is commercial, then the property would be dual classed as commercial and multi-residential. If the assessor determines the primary use is for human habitation then the property would be classed as all multi-residential.
Response Updated April 28, 2014: It has been determined that mineral rights would qualify for the Business Property Tax Credit. Effective 4/25/14
5.11: Are cable TV parcels contiguous? Should they be receiving multiple or one credit in my jurisdiction? They parcel numbers are set up by taxing district but there is no actual real estate or legal description associated with those parcels. They get one value for the entire county and that is allocated by the number of subscribers in each tax district. Obviously, all of those cables and subscriber drops are connected somewhere. It seems like they should only be getting one credit per County when reading the law. They are the same class, owned by the same person, in the same county, and operated for a common purpose. The only exception would be contiguous parcels of which they do not have actual real estate defined by legal descriptions. What is a Property Unit? A property unit is a new concept specific to the credit. The law defines a property unit as contiguous parcels of the same classification that are owned by the same person, located in the same county, and operated by that person for a common use and purpose.
Response: The examples provided and discussed indicate that the cable, if one cable would be considered contiguous because it is one cable. If there is other property that is not cable and on separate parcels, the cable by itself does not create contiguity.
5.10: In a multi-parcel contiguous situation is the credit applied to one parcel or allocated to all the parcels?
Response: The credit is allocated to each parcel within the unit based on the total tax attributed to each parcel for the unit as a whole.
5.9: When an application is filed and a contiguous parcel is NOT included on the application, do we have them re-file or do we add the contiguous parcel numbers to the application? Our office manager says that is ‘altering’ an official document.
Response: If you know there are issues with the application it would be incumbent on you to contact the applicant and inform them proactively what the issues are since presumably they believe they have applied correctly.
5.8: Three contiguous parcels. All multiple tenant office buildings. The ‘end’ parcel is partially owner occupied –the remaining two are fully leased properties. One application or two or three?
Response: For each separate item on the tax list common use and purpose may be as an owner occupant or as a landlord tenant. From your description one common use and purpose is as an owner occupant and another common use and purpose is as a landlord.
5.7: Two contiguous parcels one owned by ABC Corp by deed the second Owned by 123 Corp by deed with recorded contract to ABC Corp. Both parcels used by ABC Corp for same purpose.
One or two Units?
Response: Contract buyers are considered to have rights of ownership as it pertains to the business property tax credit and therefore be considered a different “owner” or person under the code.
5.6: Questions C66 & C68 (now C. 5.5) for the Business Property Tax Credit are the same, so this covers both. The answer given is the opposite to what the assessor's were told at their state school. If I own twelve contiguous parcels, leased or not and have twelve distinct business's on each parcel that is not a common use and they would have twelve applications. C66 & C68 are telling us the opposite, which is correct?
Response: The answers provided in C66 & C68 were conveyed at Fall School.
5.5: If a property owner owns 12 separate, but contiguous parcels with 12 different businesses, only one of which is operated by the property owner. How many credits will the property owner receive?
Response: Common use and purpose is considered as an owner operator of a business or a landlord lessor common use and purpose. In your example there would be two common uses and purpose, an owner occupant and a landlord, assuming all other criteria for sharing a common boundary are met.
5.4: Is it necessary to list all contiguous properties or can an owner just identify one property to simply the Application and administration of the Credit? For example, if 8 parcels are contiguous, owned by the same person and total 25 acres, only one Credit is available. Dividing the credit among 8 parcels would appear to be an administrative headache.
Response: If a property owner does not apply for the credit it is not available for parcels or property for which no application was received.
5.3: If there are three contiguous parcels, two are classified as commercial and one is classified as industrial, does that mean that there are two separate property units since they do not have the same classification? If so, would you need to file two separate applications?
Response: A unit must be comprised of the same classifications. The commercially classed parcels would qualify as one unit if all other requirements are met and the industrially classed parcel would qualify as a unit if all other criteria were met. If the taxpayer has applied on one application it would behove the assessor to contact the taxpayer and inform them of this situation so they would apply on a separate application.
5.2: A bank owns 2 contiguous parcels, Both parcels are the same ownership, Both parcels are classified commercial, Bank on 1 parcel, Second parcel adjoining to the north is vacant, just grass and mowed, Is this common use and eligible for 1 BPTC, or 2 uses and eligible 2 BPTCs?, What if the bank is vacant and not in use?
Response: If the vacant grass is used in conjunction with the bank and a part of the bank "campus" then it would constitute one unit.
If the bank is vacant and not in use the question remains the same, is the vacant grass used on conjunction and a part of the bank "campus" and would it be sold with the bank in the event of a sales transaction. If so, it would be one unit.
5.1: What happens if I have a City Assessor jurisdiction and a property owner has a contiguous parcel located outside the city but within the County in which the city resides? Does the property owner get two units one for the city and one for the county or is it one unit because the parcels are within the same county? The language indicates units are by county and the city is not the qualifier for defining the boundary.
Response: New Code Section 426C.1 provides that the property units are located within the same county. The property tax payer would have one unit so long as the other criteria were met.
6.8: If a property is getting an urban rent abatement or 5-year industrial exemption, what valuation is reported 100% or taxable?
Response: The credit is calculated based on the 100% DOM valuation which is assessed value less any exempted value.
6.7: We have a city that has a 2 year tax abatement on improvements. Does this affect the credit? Example. Land assessed at $8,000, improvement at $22,000. $22,000 abated for two years. Taxable value is $8,000. Would the credit be calculated based on the $8,000?
Response: The credit would be calculated against the $8,000 which represents the assessed value less any exempted values which equals the 100% DOM value and also the taxable value before application of the rollback.
6.6: I have a Commercial property that gets a tax adjustment from the City (it began as a new business agreement). I have been given a “Certificate of Adjustment” to reduce to what their Taxable Value is to be for this tax year. So, is this taxable value to be reached before or after the rollback is in place?
Response: The rollback is applied to the assessed value less any applicable exemptions.
6.5: Will the Application for Industrial Partial Property Tax Exemption (for projects without City agreements) automatically be implemented/calculated by the County at the 95% or 90% levels? If so, will the County also be calculating the first $145,000 at the residential rate?
Response: The rollback or assessment limitation of 95% and 90% is not an exemption. This is applied to all commercial, industrial and railroad classed property. The Department of Revenue will determine the initial valuation to be used in the credit calculation. The credit calculation is based on the qualifying units for the entire state and their associated valuations and applicable average consolidated rates for each unit.
6.4:. What would be the County’s position if the City files a Minimum Assessment Agreement (approved by Developer) at a valuation that would account for the 5% or 10% rollback, the applicable tax credit, and the first $145,000 equal to the residential rate?
Response: It appears from the statute that an assessor is not prohibited from assigning a higher than actual value to the property under 403.6 (19) “b”.
6.3: As an example for a project with a 10 Year assessment agreement that includes a building with a typical/realistic $1,000,000 valuation at 100% that would generate $30,000 in current annual property taxes. With the rollback to 90%, an annual property tax credit of $2,000, and the first $145,000 at residential rate, say the new “net” property taxes paid are now $25,000 (loss of $5,000 annually or $50,000 over 10 years). Could the City submit to the County a Minimum Assessment Agreement for $1,200,000 instead of $1,000,000 to cover the loss of anticipated tax revenue? (Again, it would be voluntarily executed by the Developer).
Response: It appears from the statute that an assessor is not prohibited from assigning a higher than actual value to the property under 403.6 (19) “b”.
6.2: For new Minimum Assessment/Developmental Agreements, would it be feasible (and acceptable by the County) for our agreements to include language that the Developer voluntarily agrees to somehow “waive” its right to the:
A. 95% or 90% rollback;
Response:There are no provisions allowing for opting out of the rollback calculations. There is a provision for state funding of the entire rollback amounts to the local governments for the 5% loss in the first year and the 10% loss in the 2nd year for commercial and industrial property for the first two years. After the first two years the funded amount is capped and therefore apportioned to the counties if the future amounts exceed the funded amount.
B. First $145,000 of property value that would be equal to the residential rollback;
Response: In the first year the estimated initial value determined by the Legislative Services Agency is $33,000. This is compared to the assessed value of the unit and the lessor of the two values is the amount used in the calculation of the Business Property Tax Credit. The initial value is determined based upon all of the applied for and qualifying units and their associated average consolidated rates that spends 98% of the fund. For estimated credit amounts see Q & A B5.
The credit is a state funded amount capped at $125 Million and credit amounts do not exceed the state funding.
6.1: May the property owner contractually agree, in a development agreement and/or in a minimum assessment agreement under Iowa Code Section 403.6(19), with a city to waive the 10% rollback (or any other percentage rollback that may be enacted in the future) of the assessed value to the taxable value, and if so, will the Assessor accept the waiver from a legal standpoint? If so, what must be included in the waiver to make it enforceable?
Response: No, a taxpayer may not contractually agree to waive the rollback calculation.
7.15: I have a building downtown that is classified as Commercial, it is a retail store, with an apartment above. The store has been vacant for 2 years, but the apartment is still being rented out. Does this qualify for the credit, since it’s primary use right now is for human habitation?
Response: The language for qualification for the business property tax credit indicates that commercial or industrially classed property that is primarily used or intended for use for human habitation containing three or more separate dwelling units does not qualify for the credit. You have indicated the apartment is a single dwelling unit classed as commercial.
Because it is only a single dwelling unit classed commercial for the 2013 it would qualify for the business property tax credit. Once the portion of the property is classed as multi-residential for the 2015 assessment that portion classed as multi-residential would not qualify for the credit.
7.14: So where do these parcels fall for the 2013 & 2014 years since they will be classified as commercial until 2015? Are they eligible for the business credit until they go to Multi-Res?
Response: Properties that are primarily used or intended for use for human habitation containing three units or more, or manufactured home parks, mobile home parks, assisted living facilities, land leased facilities, or section 42 housing do not qualify for the business property tax credit.
7.13: Hi - I am curious how property tax credits are handled for properties that are commercial on the main floor of the building and have apartments in the upstairs? Thanks!
Response: The assessor is required to determine the primary use of the property unit. If the primary use is commercial and not for human habitation containing three units or more the property unit, if it meets the other criteria, may qualify for the credit.
7.12: A commercial business building is owned by an individual. His retail business is on the ground floor and he lives in an upstairs apartment in that building(no rent paid to himself). Does he qualify for half of the credit?
Response: If the property is a separate item on the tax list (single parcel), and the primary use is commercial and not for human habitation containing three or more dwelling units, the entire parcel would qualify for the credit for the 2013 and 2014 assessments. For the 2015 assessment a portion of the property would continue to be classed as commercial and the portion used for human habitation would be classed as multi-residential. At that time only the commercial portion of the property would qualify for the credit.
7.11: If the building has several offices and 2 living quarters, then this is considered dual use and tax credits are given only on the part of the property that is used for offices for commercial reasons. Is this correct?
Response: Assuming this is a single item on the tax list, for 2013 and 2014 assessment this is not correct. As long as the primary use of the property is not for human habitation containing three units or more the entire property qualifies for the business property tax credit For 2013 and 2014 assessments.
Updated 8/13/14: In 2015 when multi-residential classification occurs the assessor is required to determine the primary use of the property. In the case where there is both commercial use and use that qualifies as human habitation the assessor is required to determine the primary use of the property. If the primary use of the property is commercial, then the property would be dual classed as commercial and multi-residential. If the assessor determines the primary use is for human habitation then the property would be classed as all multi-residential.
7.10: And if there are offices and 3 or more living quarters, then is the building still considered dual use, in this case are tax credits also available on the offices used for commercial reasons?
Response: Assuming the property is a single item on the tax list, the assessor will have to determine the primary use and if the primary use is for human habitation containing 3 or more units the property would not qualify for the credit for 2013 and 2014 assessments.
Updated 8/13/14: Assuming the property is a single item on the tax list and where there is both commercial use and use that qualifies as human habitation the assessor is required to determine the primary use of the property. If the primary use of the property is commercial, then the property would be dual classed as commercial and multi-residential. If the assessor determines the primary use is for human habitation then the property would be classed as all multi-residential.
7.9: We have Ashford University in the City of Clinton and they purchased the Best Western Motel a couple of years ago and use it for dorm purposes. This is on the other side of town from their campus. Does this qualify for the credit or is this considered a multi-unit residence? There’s not classrooms on this property. Only dormitory use.
Response: Property primarily used for human habitation containing three or more units does not qualify for the business property tax credit.
7.8: I apologize if I wasn't clear about the duplex and mini storage, they are separate buildings and all of the duplex is used for human habitation. 441.21 subsection 13a is clear that buildings of 3 or more dwelling units are multi-res and that buildings not intended for human habitation that have living units in them, regardless of the number of living units, that portion is multi-res. It says nothing about a stand alone duplex. If the Department feels that a duplex should be included, I have no problem with that.
Response: You do not say if this is one parcel or more than one parcel. From your first question it appears to be one parcel that is classed as comercial or industrial. If that is the case, and the primary use is commercial and not primarily used or intended for use for human habitation containing three or more units then the parcel qualifies for the credit. If it is not one parcel then what do you have the duplex classed? Residential? If you have the duplex as a separate parcel it should be classed as residential.
7.7: On business around the typical square where it is commercial on the first floor and there are 3 or more apartments on second floor, does it get the BPTC credit for 2013 & 2014 prior to the multi residential classification?
Response: Assuming the referenced property is a single item on the tax list, the property primarily used for human habitation containing three or more separate dwelling units does not qualify for the business property tax credit. See A2. The assessor is required to determine the primary use of the property.
7.6: How is it handled when 2015 arrives and the second floor gets the multi res and the first floor is still commercial?
Response: Assuming the property is a single item on the tax list, or 2015 assessment the portion of the property classed as commercial or industrial qualifies for the business property tax credit and the portion of the property classed as multi-residential property does not qualify for the credit but receives the rollback applicable to multi-residential.
7.5: I have a building with 3 stories and a finished basement. Basement and 1st floor are office space. 2nd story has 4 apartments and 3rd story has 6 apartments. Will this qualify for the BPTC or will it be considered multi-res?
Response: Posted 8/13/14: Assuming the property is a single item on the tax list for the 2015 assessment the assessor will have to determine the primary use of the property. If the primary use is commercial the property would be dual classed as commercial and multi-residential and only the commercial portion will qualify for the business property tax credit. If the primary use is for human habitation the entire property would be classed as multi-residential and it would not qualify for the business property tax credit.
7.4: We have a property which has been classified as residential- it is a dwelling with a flower shop on an addition. The owner would like to split it off, so that portion which is used as commercial would get the benefit of the tax credit. What do they need to do in order for us to change that classification?
Response: I am assuming you are describing a single item on the tax list. Residential property does not qualify for the business property tax credit. The flower shop would need to be a separate item on the tax list and classified and taxed as commercial property to qualify for the business property tax credit. The assessor is responsible for determining primary classification of property for property tax purposes.
7.3: How will apartment buildings/parcels with BOTH units at market rent and Section 42 be treated?
a. Response: 441.21, subsection 13 c, Accordingly, for parcels that, in part, satisfy the requirements for classification as multi-residential property, the assessor shall assign to that portion of the parcel the classification of multi-residential property and to such other portions of the parcel the property classification for which such other portions qualify.
b. Response: The property valuation should reflect both market value for the units that are market rate and the special valuation procedures for Section 42 low income housing found in 441.21, subsection 2 for the units that qualify for Section 42 treatment. In this case, effective January 1, 2015 the property would be dual classed; the portion of the property reflecting market value and market rents would be reclassified as multi-residential based on 441.21, subsection 13 (including a proportionate share of the land) and the portion of the property valued under 441.21, subsection 2 would remain commercial based on 441.21, subsection 13 d.
c. Response: In both cases property that is primarily used for human habitation containing three units or more does not qualify for the business property tax credit. 426C.4
7.2: Parcels with single or two family dwelling units remain residential even if they are rented and contiguous and owned by the same "person" as long as commercial or industrial classification is not associated as part of the same building or parcel. If there is no commercial or industrial use, single family dwellings and duplexes continue to be classed as residential because they are less than 3 units.
7.1: We have a parcel that consists of 6 apartment buildings, a pool, and a clubhouse. Obviously the apartments will be considered multi-res, but what about the pool and clubhouse. The pool is used by the residences of the complexes as well as the clubhouse, but no human habitation actually happens here. Will this be an instance of dual class?
Response: This will not be a case of dual classification. In this case, property used in conjunction with the primary use, would be classed the same as the primary classification. Property used in conjunction with the multi-residential the classification should also be multi-residential.
New Feb 6: 8.24: We received an application on January 17th, 2014. Does the Board of Supervisors deny this for being late for 2013? If so, does the taxpayer need to refile for 2014?
Response: 426C.3 (2)b A claim for credit filed after the deadline for filing claims shall be considered as a claim for the following year. The taxpayer does not need to refile for 2014. The application is denied for the 2013 assessment and approved for the 2014 assessment.
8.23: Ownership changes, do midyear changes that need reapplication lose the credit for that year since the timely application is no longer valid?
Response: Transfers or other ownership changes that occur before the application deadline require reapplication for the credit to be continued. If an application for the credit has been accepted and approved and subsequent transfers or other ownership changes that occur after the filing deadline allow the credit to be continued for the original filing year and the reapplication is required for the following year.
8.22: Application received. Four contiguous parcels are industrial, but the application also included 5 adjoining agriculturally classified parcels. I understand the agri parcels do not qualify, but do I have the owner/agent re-file or just recommend for allowance for the credit on the qualifying parcels? If we are disallowing a portion of the parcels listed, does the recommendation of disallowance for the agri parcels need to be brought to the supervisors?
Response: If any part of the application is disallowed the disallowance must be in writing and provided to the supervisors for their approval.
8.21: Question B6. States a person may submit an application for the business property tax credit via mail, fax or e-mail. If the application is submitted via fax or e-mail, do we need a copy with the original signature for the application?
Response: An application received digitally may have a typed signature.
8.20: Can we accept the signed BPTC applications if they email them to us?
8.19: Our office received about a dozen applications from a national firm. On all of the application forms, where it has: “I certify the property unit identified above is eligible for the credit,” below where “Signed:” the name is typed, not a signature. Is an actual signature required or is a typed in name acceptable?
Response: A typed name is acceptable.
8.18: Does the application have to be filed by the property owner? I received an application today. The proof of ownership is a memorandum of contract which is recorded in my county. However, a memorandum of contract is not put in the transfer books. I am showing the property owned by someone else other than who applied for the credit. May I accept this application?
Response: A person may apply for the credit. The application does not have to be filed by the owner.
8.17: How do we handle if we receive forms in the mail that either have too many or not enough of the legitimate parcel numbers on the form?
Response: A person may apply for the credit and the assessor is responsible to determine if the application qualifies. The code also requires the assessor to provide written documentation to the board of supervisors of the reason the application does not qualify. If you know there are issues with the application it would be incumbent on you to contact the applicant and inform them proactively what the issues are since presumably they believe they have applied correctly.
8.16: How do we handle if we receive forms in the mail that have multiple units written on one form?
Response: The code also requires the assessor to provide written documentation to the board of supervisors of the reason the application does not qualify. If you know there are issues with the application it would be incumbent on you to contact the applicant and inform them proactively what the issues are since presumably they believe they have applied correctly.
8.15: Confirming the situation of a business with only one parcel would not qualify for this credit as there are no contiguous parcels.
Response: Qualification for the credit is based on classification as commercial, industrial or railroad property that is not primarily used for human habitation containing three units or more or Section 42 housing, manufactured home park, mobile home park, land leased community, operated by a person for a common use and purpose. A single parcel qualifies if it meets all of the other criteria and is a separate item on the tax list that is not a part of a property unit.
8.14: Corporation 1 owns a commercial property. Corporation 2 rents said property from Corporation 1 for the operation of its manufacturing business. Corporation 2 pays property taxes on the property. Is either entity eligible for the credit?
Response: The property unit qualifies for a credit if it meets the other criteria for qualification. The credit is a credit against tax and is contained on the tax statement for each parcel within the unit. It serves to reduce the tax burden on the parcels within the property unit. The common use and purpose to the owner of the property unit in your example is a landlord and lessor.
8.13: Is there a requirement for who signs the application form? Does it need to be a title holder, representative, or can anyone sign the application?
Response: A person may apply for the credit. The language does not specify the application requires a signiture by a title holder or representative.
8.12: Where do the applications go – to the State of Iowa or to the County Treasurer? If to the state, what address do they use?
Response: The applications are submitted to the local county or city assessor for their recommendations for approval or disapproval.
8.11: I work for a company that has multiple parcels in multiple counties, do we need to file each one separately? And for the “Jurisdiction” we need to put the county the parcel is under correct?
Response: Applications would be required for each unit as defined within 426C and for each county and or city if the city has a city assessor. The application should contain the appropriate parcel number or numbers, and ownership.
8.10: On the application form, under Year Applicable; Can one claim more than one year on the form, or is this an annual application process?
Response: Once an application is accepted and approved the credit continues unless the property ceases to qualify or if there is a transfer or ownership otherwise changes.
8.9: We are a retailer operating several locations in Iowa, where we are the lessee with triple net leases. As lessee, we are responsible for all property taxes.
The landlord owns the property, but we are operating the business in the location. Would we qualify for the property tax credits?
Response: The business property tax credit is applied as a credit against tax. Qualification for the credit is dependent upon classification as commercial, industrial or railroad classed property and excludes property primarily used for human habitation containg three or more units as well as other specifically defined property. A person may apply for the credit. Lessee's are not precluded from applying for the credit if all other requirements are met.
8.8: Is it necessary to have the “evidence of ownership” information on the Business Property Tax Credit application? Could we change that to “Is there any part of this property that is not owner occupied and is leased to another party?” or some wording like that? Why do we need “evidence of ownership”?
Response: The form was amended on 10-11-13 and evidence of ownership was removed from the form because the language only requires a person to
8.7: Please verify filing deadlines. I understand that the filing deadline for 2013 assessment is January 15. January 15th 2014 is the filing deadline for the first year. Do we need to file again by March 15, 2014 for the 2014 assessment?
Response:Once an application has been received and approved a person does not need to reapply for the credit unless the property transfers or the ownership otherwise changes or the property ceases to qualify. When all or a portion of a parcel or property unit transfers or ownership otherwise changes the buyer is required to reapply to qualify for the credit. If any portion of a parcel or property unit that is sold or ownership otherwise changes the portion of the parcel or property unit that did not transfer is required to reapply for the credit as well.
8.6: In the interest of operational efficiency, I have chosen to combine these 3 parcels which are operated as one retail store for the 2014 assessment year. The owner correctly filed for one credit for 2013 year. As the ownership will not be changing, the property owner is not required to re-file for the credit? Should the new combined parcel retain the existing unit number, or should it be treated as a new application even though there is no new paperwork?
Response: If you have received a BPTC Unit ID # for the unit and you change the parcels you will need to resubmit for a new BPTC Unit ID#. If the property ownership has not changed or the property unit has not transfered the owner or person need not reapply.
8.5: If a property is in an individual’s name and then changes it into a trust, do they need to sign a new application even though they are the same people??
Response: 426C.3 (7) requires reapplication when all or a portion of the property unit is transferred or ownership otherwise changes. See B2
8.4: If a property is in a triple net lease, who is required to sign for the credit??
Response: See B6 See also C12. A person may apply for the credit on qualifying property. The code does not preclude someone other than the owner from applying for the credit.
8.3: My business owns properties in 4 different counties (all non-contiguous). Should I file an application with each county for the property located in that county? Are there any other considerations that I should be aware of?
Response: The business property tax credit is by county. 426C.3 (1) The forms shall be filed with the appropriate assessor. Please review the back of the application form for other considerations: http://iowa.gov/tax/locgov/54-024.pdf
8.2: Does the application have to be filed by the property owner? I received an application today. The proof of ownership is a memorandum of contract which is recorded in my county. However, a memorandum of contract is not put in the transfer books. I am showing the property owned by someone else other than who applied for the credit. May I accept this application?
a. Response: 426C.3 (1) Each person who wishes to claim the credit allowed under this chapter shall obtain the appropriate form and file the claim with the assessor. The language does not prohibit agents, attorneys or tax representatives from filing the claim for the owner.
b. A memorandum of contract does not transfer ownership. As a result the application may be received however determination of contiguity and other criteria for qualification of the credit should be based upon the ownership recorded on the deed or recorded contract.
8.1: Can a registered agent, attorney or tax rep file for the business tax credit, or must it be the owner? If it is not the owner filing, how do we verify the person's authority to do it? Or do we care?
Response: 426C.3 (1) Each person who wishes to claim the credit allowed under this chapter shall obtain the appropriate form and file the claim with the assessor. The language does not prohibit agents, attorneys or tax representatives from filing the claim for the owner.
9.2: A mobile home dealer should be able to file for a business tax credit if he owns the building where is he selling mobile homes. This question relates to those dealers whose business is not located in a mobile home park. My second question is for those members, owning a mobile home park, but having a business located within the park. It is essentially their office within the mobile home park. They use the office both to sell homes and to conduct the business of the mobile home park. I know that the mobile home park becomes a multi-residential entity on January 1, 2015. Would it be legal for the owner of the business office, within the mobile home park, to file for the business tax credit? After 2015, would it be legal for the owner to file for a credit just on the business office in the park?
Response: Property that is a mobile home park that is one item on the tax list classed as commercial does not qualify for the business property tax credit.
9.1: Campgrounds-mobile home parks. I have some campgrounds that have RV spots, tent spots, mobile home spots etc. They rent by the day, season, etc. Some are moved off, some are there permanently. In this case would it be commercial or would a person have to decide if more spots were permanent & decide primary use?
a. Response: Land leased communities organized under 335.30A and 414.28A, manufactured home community means the same as land leased communities, mobile-home park means the same as defined in section 435.1. If the “campground – mobile- home park” is organized under these sections of the code they would qualify for multi-residential classification. However, 441.21 Subsection 13 also defines dwelling units to include an apartment, group of rooms, or single room which is occupied as a separate living quarters or, if vacant, is intended for occupancy as separate living quarters, in which a tenant can live and sleep separately from any other persons in the building. So, it would appear that if the property it not organized as a land leased community it would not qualify. Also, any portion that is not occupied as a dwelling defined below would not qualify for multi-residential classification.
b. Response: 441.21 Subsection 13 d excludes hotels, motels, inns or other buildings where rooms or dwelling units are usually rented for less than one month from being classified mutli-residential property.
10.10: What do we do with commercial classed nursing homes?
Response: Commercial classed nursing homes will be reclassified as multi-residential for 2015 assessment.
10.9: Care Initiatives & Housing Cooperatives: Court cases changed class to residential previously. They could now be multi-residential according to the new class rules. What class will they be for 2015?
Response: Multi-residential classification is for property that is classed as commercial and not already classified as residential. Nursing homes that are currently classed as residential because the meet the statutory requirements under 441.21 Subdivision 11 will remain residential. Nursing homes that are classed as commercial will be reclassified as multi-residential for 2015 assessment.
10.8: Are nursing homes excluded from multi-residential?
Response: Nursing homes qualify for multi-residential classification unless otherwise classed as residential.
10.7: Multi-residential: what about apartment buildings that have some units that are Section 42 and some are at market?
Response: In this case the property will be dual classed, a portion with the market rate apartments should be classed as multi-residential and a portion that is Section 42 remains commercial.
10.6: Will the new multi-residential class of property create a new category for equalization? Or will apartment sales continue to be used as commercial sales?
Response: Equalization is by class of property and apartment sales will be used to equalize the multi-residential class, not the commercial class.
10.5: Is a nursing home to be multi-residential and therefore excluded from the business property tax credit?
Response: Nursing homes not otherwise classed as residential will be reclassified as multi-residential for the 2015 assessment. Properties that are primarily used for human habitation containing three or more dwelling units do not qualify for the business property tax credit.
10.4: Will nursing homes be classified as Multi-Residential Class for 2015 and not eligible for the BPTC?
Response: Nursing homes classed as commercial do not qualify for the business property tax credit because they are primarily used for human habitation. See A2.
10.3: If a commercial building has apartments on the upper level with water, plumbing and heat but the city will not allow them to be rented in their present condition, are they still considered multi- residential? The same question could apply to a building that the city has condemned.
Response: Classification is based on primary use. If the apartments are precluded because of other factors from being used for multi-residential purposes then this cannot be the primary use.
10.2: Are we supposed to be assigning a unit #/aggregation indicator on property that is defined to be multi-residential on the spreadsheet? I have talked to one county and they are under the assumption we are to give a unit # for 2013 and 2014 til they qualify for the multi-res for 2015. I don’t read my solutions phases of instructions that way so I am thinking some of us need clarification of what is excpected.
Response: Property that does not qualify for the business property tax credit because they are primarily used for human habitation should NOT receive an aggregation indicator for the file that is submitted by the assessor to the department. Only proprety that qualifies for the credit should receive an aggregation indicator.
10.1: Beginning with the 2015 assessment, property that is primarily used or intended for human habitation containing 3 units or more, and that portion of a commercial or industrial building that is used or intended for human habitation as well as a proportionate share of the land upon which the building is situated, regardless of the number of dwelling units located in the building, shall be classed as multi- residential. For properties that have dual use the result will be dual classification on a single parcel with the proportionate share attributable to human habitation classified as multi-residential.
a. Multi-residential includes:
i. Mobile home parks
ii. Manufactured home communities
iii. Land-leased communities
iv. Assisted living facilities
v. Property primarily used or intended for human habitation containing three or more separate dwelling units
vi. Portions of property less than three units that is used or intended to be used for human habitation (and a portion of the land) regardless of the number of units and that is not otherwise classed as residential
i. Section 41 Housing
ii.Updated 8/13/14: SF 2466 2014 legislation allows for a property owner that has Section 42 housing to elect to withdraw the property from the special valuation procedures for Section 42 housing. If a property does this election, it may qualify for classification as multi-residential.
Section 42 housing that is valued based on the special valuation procedures does not qualify for the multi-residential classification and remains classed as commercial property.
c. Dwelling units are defined as:
ii. Group of rooms
iii. Single room
iv. Occupied as separate living quarters or
v. If vacant, is intended for occupancy as separate living quarters
vi. Where a tenant can live and sleep separately
d. Used or intended to be used for human habitation presumes adequate running water, heat and electricity that are available and functioning.
e. Dwelling units exclude:
iv. Other buildings where rooms or dwelling units are typically rented for less than one month.
11.18: How should the rollback and credit be treated in the valuation process?
Response: The rollback and the credit are not part of the valuation process and have no bearing on how market values are derived.
11.17: Please define a change in use of the property.
Response: A change in use maybe a property that had three apartments and retail space removed all of the utilities for the apartments so they are no longer intended for human habitation. This would represent a change in use.
11.16: If the file is sent from one software (Example Tyler) and unit numbers are assigned accordingly. Can a different software in the auditor’s office (Example Solutions) pick up the DOM unit numbers so they can process the credits?
Response: The file layout for the BPTC Unit ID’s is a standard file layout so both systems can handle the same file.
11.15: What happens if a valuation is changed by a PAAB or court ruling after submitted but prior to taxes being calculated?
Response: Depending on the timing of when the court or PAAB ruling is final and the Department receives the information from the Auditor a correction will be done by the Department. The Department is then charged with notifying the taxpayer and or Auditor, depending on the circumstances.
11.14: On a dual classed parcel will there be a value for each class?
11.13: Who notifies the property owner if an application is not approved?
Response: The Board of Supervisors is charged with providing written notice to the taxpayer outlining the reasons for the denial. The assessor is required to provide the Board of Supervisors with written reasons for each denial.
11.12: How does this work with minimum assessment agreements?
Response: The valuation determined by the assessor as the assessed value is the valuation that the rollback is applied to. The rollback will reduce the taxable value. Replacement claim dollars are paid for the initial loss of tax revenue for commercial and industrial classed property.
11.11: When the credit is calculated and sent back to the county will the credit be applied by unit or by parcel#? Taxes are paid by parcel so will we have to split the credit by unit to each parcel?
Response: The credit is apportioned to each parcel within the unit based on the total tax attributed to each parcel for the unit as a whole. The Department of Revenue will provide the credit amount to each parcel within the unit.
11.10: District court costs more than what the credit is worth. Do we error on the side of several units?
Response: It is the assessor’s duty and responsibility under 426C to determine the appropriate number of units based on the statutory criteria.
11.9: We are attempting to enter some Applications for the Business Property Tax Credit in our Incode system; however, we have some questions. Am hoping you can help us.
Response: You will need to contact your vendor for assistance with their application.
A. What is the Aggregation Number and what is its purpose? Is this a number we assign or does it automatically get assigned?
Response: The aggregation number is the number you assign that indicates which parcels should be in one Unit. The BPTC Unit ID number is assigned by the department based upon which parcels you indicate should be within one unit and the BPTC Unit ID number replaces the aggregation indicators that were initially assigned by the assessor.B. Is it required that we enter a year in the Removal Assessment year or do we leave it at 0 until a change is made and they no longer qualify?
Response: I am unsure exactly what the Removal Assessment year is and I assume it must be within your property tax administration software application. You will need to contact your vendor for this answer.
C. What is the State Unit Number and how exactly is that generated? What is its relationship to the Aggregation Number?
Response: The Department-issued Business Property Tax Unit ID number (BPTC Unit ID) is the number generated by the state that is uploaded into the property tax administration software. The aggregation indicator is simply the number the assessor has assigned to the unit and it is replaced with the full BPTC Unit ID numbers.
D. There is a field called “This Parcels Sequence #”. Does this refer to the sequence for the Aggregation Number or for the State Unit Number?
Response: This refers to the BPTC Unit ID number issued by the state. The sequence field is specific to the BPTC Unit ID number and not the aggregation indicator.
11.8: How is a property owner formally notified of the number of units assigned by the assessor? How does a property owner appeal the assessor decision on the number of units? If the assessor says two parcels/one unit/one credit and the property owner believes there to be two parcels/two units/two credits, what is the appeal process?
Response: The appeal process for a denied application for the business property tax credit is through District Court under 426C.6. Any denial of a credit application must be in writing from the Board of Supervisors.
11.7: An elevator filed an application for their grain handling parcel? I assumed grain handling and credit unions would not be eligible for this credit. Is this correct?
Response: Grain handling parcels assessed under Iowa Code 428.35 as an excise tax do not qualify for the business property tax credit. Parcels assessed as credit unions assessed under Iowa Code 533.329 do not qualify for the business property tax credit.
11.6: It is mentioned that centrally assessed railroad is a different unit than locally assessed railroad property. What about all the vacant lots that the railroad owns that are locally assessed but run along the track lines? Would they each have to be a different unit if they are not contiguous with EACH OTHER or would they all be one unit since they all touch the centrally assessed rail line?
Response: Units must be the same classification. Railroad public utility is not the same classification as commercial or industrial classification.
11.5: Entities such as the Eagles or the Elks lodges that we only have 10% taxable value and the rest is exempt do NOT qualify, correct? They are not eligible for the credit on their 10% taxable portion since the rest of their property is exempt right?
Response: The criteria for qualification are clarified in section A of the questions and answers.
11.4: Do only locally assessed railroad receives the credit? We thought we heard at fall school that even centrally assessed railroad qualified?
Response: 426C.4 Property classified and taxed as commercial property, industrial property, or railroad property under chapter 434, is eligible for the credit. Chapter 434 is specific to operating railroad that is centrally assessed.
11.3: I have a property that was taxable for the 2013 assessment year, but is now owned by a church and they have turned it into a free medical clinic. They have applied for exemption for 2014. Would they qualify for the one year or not as the owner is tax exempt? They do still have to pay the taxes due on the 2013 assessment.
Response: Property that is assessed and classed as commercial property, industrial property or railroad property under chapter 434 are eligible for the credit as long as there are taxes due and payable associated with the assessment year for which they were taxable.
11.2: How will the “backfill” process (and timing) work in terms of the City receiving reimbursement for the 5% or 10% rollback? Also, is the first $145,000 of property value at the residential rate included in the backfill formula?
Response: Payments for the replacement claim amounts for the rollback for commercial and industrial property are made to county treasurers in September and March of each year. Payments for the business property tax credit are made to county treasurers on November 15th and March 15th of each year.
11.1: We are a municipal utility. We pay replacement tax in lieu of property tax,:
- on land with buildings located within one county,
- on land with communications towers located in more than 1 county,
- on land with transmission lines running through 12 counties, and
- on land with wind energy structures located in one county.
In your on-line Q & A, I read an excerpt that says “If the land or improvements are not subject to a property tax it will not be eligible for the credit.” Since we pay only replacement tax do we qualify for the credit?
Response: Property that is centrally assessed, excluding railroads, as public utility operating property does not qualify for the business property tax credit or the commercial, industrial, railroad rollback. Property that is locally assessed and otherwise qualifies as commercial, industrial or railroad property is entitled to the credit and rollback.
Exempted property does not qualify for the credit or the rollback.
If all of your property is centrally assessed and pays replacement tax as operating property it does not qualify for the credit. If any of your property is locally asssessed and subject to local property taxes and is classed commercial, industrial or railroad and otherwise meets the criteria for the credit it may qualify for both the credit and the rolback.
12.10: Is a buyer on contract considered the owner?
12.9: We have several applications for Business Property Tax Credit. The properties are filed by the deed holder (no mention of contract buyer on application).
A. Can the deed holder file for contract buyer?
Response: Please refer to questions B5, 8.18, 8.13, 8.2, 8.1 indicating that a person may apply for the credit.
B. If yes, and the contract buyer defaults, does credit stay in place, since the deed holder was original applicant?
Response: Please refer to question B2, 8.5 indicating a transfer or if ownership otherwise changes a reapplication is required by the owner.
12.8 Four questions from one Assessor:
A. Ownership changes all the time. Section 426C.1 (5) requires in the definition of ‘Property unit’ that the parcels “are owned by the same person”. What is the effective date of that ownership? January 15th, March 15th, July 1st? Parcels owned by the same person on January 15th may not be owned by that same person on March 15th and so on. For example, in order to qualify for the homestead credit, the owner must own the property on July 1.
Response: The language requires a new application when a property is transferred or ownership otherwise changes. If a prior application had been received and approved and the transfer or change in ownership occurs before the deadline for application for that fiscal year, a new application would be required for that fiscal year.
If the transfer occurred after the deadline and a prior application had been received and approved, the application would be retained for that fiscal year and the new application if submitted would apply for the following fiscal year, if received by the deadline for the subsequent fiscal year.
This interpretation accommodates the qualification for the credit in the event of transactions that occur after the filing deadline for the current fiscal year.
B: Section 426C.3 (7) requires “…the buyer, transferee, or new owner who wishes to receive the credit shall refile the claim for credit.” and “…the owner of the portion of the parcel or property unit for which ownership did not change shall refile the claim for credit.” Does this preclude anyone other than the owner or new owner from re-filing the claim, such as a tenant?
Response: 426C.3 Indicates a person may apply for the credit. Once a credit has been approved and a reapplication is involved, then the buyer or the seller if a portion of the unit or parcel is retained must reapply for the credit as indicated in 426C.3 (7) to continue to qualify.
C: Section 426C.4 states “A person may claim and receive one credit under this chapter for each eligible parcel unless the parcel is part of a property unit for which a credit is claimed.” and “A person may claim and receive one credit under this chapter for each property unit.” Does this mean the person who files the claim, i.e. the tax rep, receives the credit?
Response: The credit is applied as a reduction to the tax burden for all parcels included in the unit and is reflected on each individual parcel tax bill.
D: The sections in the last two questions seem to imply that “Each person” who wishes to claim the credit and files the claim is the owner. Allowing anyone to file the claim certainly could not have been the intent of the Legislature.
Response: 426C.3 language indicates a person who wishes may file a claim for the credit.
426C.3(7) recognizes once a credit has been approved and a subsequent transfer or ownership change occurs, a reapplication is required to continue to receive the credit. At that point, an application by the buyer or owner if a portion of the unit was retained is required to continue to qualify for the credit.
426C.8 indicates a person who makes a false claim for the purpose of obtaining a credit or who knowingly receives the credit without being legally entitled to it is guilty of a fraudulent practice.
12.7: I have an elevator “Pro Coop” which owns two units. They also operate an additional 10 ‘units” but, these units are owned by ‘Farmer’s Coop . Pro Coop has filed the proper paperwork, but doesn’t own it- Do we process it as though the owners filled it out?
Response: Yes. The code indicates a person may apply for the credit. It does not require the owner to make application.
12.6: Can the renters fill out paperwork?
Response: Yes. The code indicates a person may apply for the credit. It does not require the owner to make application.
12.5: Assume property is owned as Tenants in Common by A, B and C. Do each of the owners file an Application, or do they join on the same Application?
Response: An application for a separate item of the tax list (a parcel) may be filed by a person. As long as the property is a separate item on the tax list only one application is required.
12.4: Assume property is owned as Joint Tenants with full right of survivorship and not as Tenants in Common by A, B and C. Do each of the owners file an Application, or do they join on the same Application?
Response: An application for a separate item of the tax list (a parcel) may be filed by a person. As long as the property is a separate item on the tax list only one application is required.
12.3: Assume property is owned as Joint Tenants with full right of survivorship and not as Tenants in Common by A, B and C. B dies. Is a new Application by A and C required?
Response: If ownership changes or is otherwise transfered a new application is required.
12.2: Hi – I don’t understand the importance of the “Parcel” or “Property Unit” defined the frequently asked questions page and the instructions on the application. A family partnership owns a building that we operate our business out of. In addition, different family LLC (with some common ownership) has a building adjacent to us. We use some of the space to store our vehicles and lease some of the space out to other businesses. I assume this qualifies for the credit, but want to check.
Response: A person is defined in Iowa Statute 4.1. Differently named limited liability companies are considered a different person in this code. A person may apply for the business property tax credit based on the definitions found within Iowa Statute 4.1. If your parcels are owned by different legal entities they are not considered the same person and each person as defined may apply and recieve, if eligible for the business property tax credit.
12.1: If a middle initial is different on one parcel but it is the same person does that middle initial make them a different person for purposes of defining the unit? Example was John Smith, John T. Smith, J.T. Smith.
Response: For purposes of the credit, a person is defined as an individual, corporation, limited liability company, business trust, estate, trust, partnership, or any other legal entity. If you are confident or have verified that the person on both parcels is in fact the same individual, they would be considered the same person for purposes of defining the property unit.
13.1: Have Rules been adopted for the Business Property Tax Credit and if so when were the Rules published in the Bulletin?
Response: Rules are in draft form and have not been published as of 10-28-2013.
14.3: Does the “actual value” as that term is defined in Iowa Code Section 403.6(19), which sets forth the wording for the assessor’s certification, refer to “assessed value” or “taxable value?
Response: For definitions of assessed value see Iowa Code 441.21(1)”a” actual value, assessed value and taxable value all have the same meaning and are valuations before application of any applicable rollback or assessment limitation.
14.2: If the term in the assessment agreement refers to assessed value, will the Assessor roll back the figure by 10% (or whatever the applicable percentage would be in the future), to arrive at taxable value, as provided for in Senate File 295, 85th General Assembly?
14.1: If the term in the assessment agreement refers to taxable value, then will the Assessor not roll back the figure by 10% (or whatever the applicable percentage will be under future legislation)? Please refer to Iowa Code 441.21 (1) “a” referenced above.
Response: The valuation within the minimum assessment agreement will have the rollback or assessment limitation applied to it.
15.9: Our largest cable company reports to us on one form. The assessments are divided in to separate parcels for taxing purposes only. Is this one unit and therefore one credit?
Response: There is insufficient information to answer this question. Is there one cable and the cable extends to the different taxing jurisdictions? What are the improvements other than the cable? What are the physical locations of the improvements? Q & A A7e references cable TV and contiguity.
15.8: How do you assign number of parcels and sequence when only a portion of a unit has been filed. Example a tenant files a BPT on one parcel, but the owner hasn’t filed on the remaining adjoining parcels within the assigned unit. Also, it’s not always possible to find a phone number for the owner and ask them to file on the remaining parcels.
Response: You are describing the Department of Revenue BPTC Unit ID number. You do not assign this number. You are required to identify through aggregation indicators what parcels belong in a unit that has applied for the credit and been approved by the County Assessor. Upon submission of the file containing the aggregation indicators along with other relevant required information BPTC Unit ID #’s are generated and provided to you through a file exchange. The BPTC Unit ID#’s provided by the state contain the parcel count and sequence. You cannot approve parcels that have not submitted an application.
15.7: Three commercial properties on three contiguous parcels. All the same owner, 3 different scenarios: how many units?
- All three are vacant
- 1st floors vacant some apartments above
- 1 end occupied, 2 vacant
Response: In scenario a, it appears all three are available to be rented it would appear to be one unit. In scenario b, you do not indicate how many apartments so I do not know what the primary use is and if it is for human habitation. If the primary use is for human habitation then the properties do not qualify for the credit. If the primary use is commercial it is still the same example as the first example and all space is available to rent and therefore the common use and purpose is a landlord and is one unit. In scenario c, you do not indicate if this is owner occupied or leased. The answer will depend on if the spaced is leased or owner occupied.
15.6: In the case where multiple parcels comprise a unit, the credit amount is allocated to each parcel in the unit based on the proportion of total tax each parcel bears to the total amount of property taxes due and payable on the property unit.
15.5: In the case where a unit is comprised of more than one parcel, all parcels within the unit must be identified as belonging together. Each parcel will have a distinct unit ID number that identifies which unit the parcel belongs to. See instructions to the Property Tax Credit Unit Generator File.
15.4: A property owner files one application with 5 parcels which is determined by the assessor to equal two units. One unit contains 2 parcels and the other unit contains 3 parcels. At a later date one of the parcels within the 3 parcel unit sells. How does this affect the original 2 parcel unit? How does this affect the original 3 parcel unit which now only contains 2 parcels?
Response: When all or a portion of a parcel or property unit that is allowed a credit under this chapter is sold, transferred, or ownership otherwise changes, the buyer, transferee, or new owner who wishes to receive the credit shall refile the claim for credit. In addition, when a portion of a parcel or property unit that is allowed a credit under this chapter is sold, transferred, or ownership otherwise changes, the owner of the portion of the parcel or property unit for which ownership did not change shall refile the claim for credit.
15.3: If a person owns several qualifying properties, does there need to be a separate application for each parcel/unit?
Response: A separate application for each unit is required. If you know there are issues with the application it would be incumbent on you to contact the applicant and inform them proactively what the issues are since presumably they believe they have applied correctly.
15.2: A property is held in the name of Prime RE LLC and another property is held in the name of Prime RE L L C - is this one unit?
Response: It would appear this is the same person under Iowa Code 4.1 in your example as it appears that there is simply a space between the LLC based on data entry.
15.1: It appears that a "unit" is comprised of a group of contiguous parcels. Is the $523 credit applied to the "unit" as a whole or does each parcel within that "unit" receive the $523 credit?
Response: 426C.4 (1) A credit approved for a property unit shall be allocated to the several parcels within the property unit in the proportion that each parcel’s total amount of property taxes due and payable bears to the total amount of property taxes due and payable on the property unit.
16.5: If vacant land is a “unit” and it is assessed per the plat law, say $200, does it still qualify for the property tax credit.
Response: If vacant land is classed commercial or industrial and is not used in conjunction with other property that is primarily used for human habitation it will qualify for the business property tax credit.
16.4: Vacant land contiguous with same ownership and class to an improved parcel. Common use and purpose vacant versus improved?
Response: The assessor will need to determine if the vacant lot is used in conjunction with the improved parcel to determine if the common use and purpose is the same.
16.3: I have two vacant lots that are owned by the same company. They are not adjoining. They sit along the main road behind a strip owned by the City and are only grass. The lots are 160 x 25 and 112 x 25 so nothing could be built on these lots. They each were originally were a larger commercial parcel that included the strip that the City owns and the commercial structures were torn down. This company keeps these lots as green space only just to keep the area along the road looking better. Is there any reason they should qualify for the business credit? They actually both adjoin residential lots on the other side and could be classed as residential too.
Response: Please review section A of the questions and answers. Classification for property tax purposes it to be based on primary use.
16.2: I have another vacant lot question. A 6’ strip of land was split off a commercial property and sold to the adjoining owner. The adjoining piece was originally commercial also but the two parcels just weren’t combined. Now the adjoining parcel is residential. Would a 6’ strip qualify for the credit? We will be changing the class to residential and combining the two parcels for 2014.
Response: Vacant land classed as commercial, industrial or railroad may qualify for the credit if all other criteria are met.
16.1: Does vacant land qualify?
a. If it meets the other criteria for classification and taxation then vacant land may qualify.
17.3: Will the power point be on line?
Response: Yes, all presentations are available on the department website.
17.2: Screen prints of the steps for file submission.
Response: There is a video available for review of the steps for file submission.
17.1: Please clarify the updates added to the Dept of Rev website. A7e, f & g are we to ignore the original statement and just pay attention to the NEW? Also A7g the NEW statement contradicts itself, does an underground wire constitute sharing a common boundary or not?
Response: Thank you for bringing this to our attention. The review process with legal staff has reconsidered and the opinions in print now reflect the department’s position. Underground wire does not consitute sharing a common boundary.
18.4: Railroad property that is leased to another entity is locally assessed and typically it is adjoining actual railroad property. Is this is separate unit or part of the operating railroad unit? Different use so different unit?
Response: Railroad property that is locally assessed would be classed based on the primary use. If the classification is commercial or industrial it would qualify for the business property tax credit if all other criteria were met. It would not be part of the operating railroad unit because a unit must be classed the same and operating railroad and either commercial or industrial classification are not the same class.
18.3: What do we do with railroad ground when they don’t have parcel numbers assigned to them?
Response: You are required to use the Auditor files that contain parcel records for railroad property. You will need to use whatever number assignment the Auditor is using for the railroad property.
18.2: Do railroads file with the local assessor or the state?
Response: All applications are required to be filed with the local assessor.
18.1: Do only locally assessed railroad receives the credit? We thought we heard at fall school that even centrally assessed railroad qualified?
Response: 426C.4 Property classified and taxed as commercial property, industrial property, or railroad property under chapter 434, is eligible for the credit. Chapter 434 is specific to operating railroad that is centrally assessed.