Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
- Buyer and seller are typically motivated;
- Both parties are well informed or well advised and both acting in what they consider their own best interest;
- A reasonable time is allowed for exposure in the open market;
- Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
- The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
To estimate the market value of your property the Assessor generally uses three approaches:
- MARKET APPROACH is to find properties that are comparable to yours which have sold recently. Local conditions peculiar to your property are taken into consideration. The Assessor also uses sales ratio studies to determine the general level of assessment in a community in order to adjust for local conditions. This method is usually considered the most important in determining the value of residential property.
- COST APPROACH is an estimate of how many dollars at current labor and material prices it would take to replace your property with one similar to it. In the event the improvement is not new appropriate amounts for depreciation and obsolescence would be deducted from replacement value. The value of the land then would be added to arrive at the total estimate of value.
- INCOME APPROACH is used if your property produces income such as an apartment or office building. In that case, your property could be valued according to its ability to produce income under prudent management; in other words, what another investor would give for a property in order to gain its income. The income approach is the most complex of the three approaches because of the research information and analysis necessary for an accurate estimate of value. This method requires thorough knowledge of local and national financial conditions, as well as any developmental trends in the area of the subject property being appraised since errors of inaccurate information can seriously affect the final estimate of value.
State law requires that all real property be reassessed every two years. The current law requires the reassessment to occur in odd numbered years. Changes in market value as indicated by research, sales ratio studies and analysis of local conditions as well as economic trends both in and outside the construction industry are used in determining your assessment.
If you disagree with the assessor’s estimate of value, please consider these two questions before proceeding, as outlined below:
- What is the actual market value of my property?
- How does the value compare to the similar properties in the neighborhood?
If you have any questions about the assessment of your property, feel free to come in and discuss it with the assessor.
You may file a written protest with the Board of Review, which is composed of three or five members from various areas of the assessing jurisdiction. The Board operates independently of the assessor’s office, and has the power to confirm or to adjust either upward or downward any assessment.
If you are not satisfied with the decision of the Board of Review you may appeal to the property assessment appeal board or to the district court within twenty days after adjournment of said Board, or twenty days after May 31st whichever is latest.
There are a number of different taxing districts in a jurisdiction, each with a different levy. Each year the County Auditor determines for that district a levy that will yield enough money to pay for schools, police and fire protection, road maintenance and other services budgeted for in that area. The tax levy is applied to each $1,000 of a properties taxable value. The value determined by the assessor is the assessed value and is the value indicated on the assessment roll. The taxable value is the value determined by the auditor after application of state ordered “rollback” percentages for the various classes of property.
Iowa law provides for a number of exemptions and credits, including Homestead Credit and Military Exemption. It is the property owner’s responsibility to apply for these as provided by law. If the property you were occupying as a homestead is sold, or if you cease to use the property as a homestead you are required to report this to the assessor in whose jurisdiction the property is located.
January 1: Effective date of current assessment.
April 2 through April 30 inclusive: Protest of assessment period for filing with the local Board of Review.
May 1 through adjournment: Board of Review meets each year.
October 10 through November 15, inclusive: Protest period for filing with Board of Review on those properties affected by changes in value as a result of the Director of Revenue and Finance Equalization Orders (odd numbered years).
January 1 through December 31: Period for filing for Homestead Credit and Military Exemption. One time filing is provided, by statute, unless the property owner is (1) filing for a Military or Homestead Credit the first time; (2) has purchased a new or used home and is occupying the property as a homestead as of July 1st: or (3) owner was using as a homestead but did not previously file.
If the home qualifies and the property owner files on or before July 1, the exemption will go into effect for the current assessment year. If the property owner files after July 1, the exemption will go into effect the year following the sign up.
Filing is required on the following, if provisions have been made for exemptions as required:
- Native Prairies -Wetlands
- Open Prairies +Urban Revitalization
- River and Stream Banks
- Impoundment Structures
- Disabled Veterans Homestead Credit
- Family Farm Credit -Recreational Lake
- Forest Reservations
- Pollution Control
- Fruit Tree Reservations – 8 years -Forest Cover
- Wildlife Habitat
- Industrial Partial 427B
- Assessed value and taxable value are not synonymous terms.
- Property is assessed as of January 1st.
- Property is reassessed every two years.
- Taxes are levied on a value determined by the auditor by applying a “roll back” percentage to the assessed value and deducting any applicable exemptions or credits. The “roll back” percentages vary each year.
- On values determined as of January 1st, one does not start to pay taxes until eighteen months later. The “roll back” is the percentage of actual value that is determined by the Director of Revenue and Finance each year on the several classes of property where the total value increase STATEWIDE, exceeds three percent for each class of property.
The percentages so determined by the Director of Revenue and Finance are certified to and applied by the local county auditor to all property in each class effected throughout the State. Percentages determined by the Director of Revenues and Finance are the same for all the assessing jurisdictions in the State.
Increases in assessed value of individual parcels of property as determined by the assessor, may exceed four percent within a jurisdiction. Agricultural property, except agricultural dwellings, are assessed on the basis of productivity and net earning capacity using a five year crop average and capitalized at the rate set by the Legislature. The rate is currently seven percent. Tentative and final equalization orders are issued by the Director of Revenue and Finance in odd numbered years on or about August 15th, and October 1st respectively. The orders are sent to the various county auditors who apply them to the classes of property affected, if any.
Assessors and members of the Board of Review are appointed to their terms of office. Assessors, in addition to completing the required 150 hours of Continuing Education, must be approved by a majority vote of the Conference Board in order to be reappointed.
If you desire further information, questions concerning PROPERTY VALUES or other information relating thereto should be addressed to the assessor’s office in the respective jurisdiction and not the Board of Supervisors or Treasurer. The assessors of Iowa hope that the information contained herein will be of value to the property owner and has clarified some of these problems and issues relating to assessment and the applicable laws.
This information was prepared by the Public Relations Committee of the Iowa State Association of Assessors.