California homeowners and business owners are protected from surprising property tax increases by Proposition 13, but residents of Iowa are having a much different experience, with assessed values increasing 30 percent to 40 percent in a single year.
The Standard, a newspaper in Iowa’s Allamakee County, reported April 5 that residents are receiving assessment notices in the mail, and “there’s a very good chance that assessment went up, many at a far higher percentage than what has been experienced in previous years.”
Iowa assessments are supposed to be set at 100 percent of market value, and to get close to this goal, assessments are required to be adjusted every other year, up or down, to be 95 percent to 105 percent of what is determined to be fair market value.
In Allamakee County, residential assessments recently were tabulated at 75.54 percent of fair market value, and on average were increased 34 percent. Commercial properties were determined to be at 73.41 percent of fair market value and on average were increased 40 percent. Agricultural properties were increased 21 percent on average for 2023.
“If there is a light at the end of this tunnel, it could be the Iowa assessment limitation or rollback, which is an adjustment the State uses limiting increases in the aggregate taxable value of all classifications of property,” the newspaper reported. “The rollback limits how much a property’s taxable value can rise in a given year. Counties have not yet been provided the updated rollback number at this point, and it currently stands at 54.65 percent on residential classed property, but in a nutshell this variable, along with any changes to levies, could mean that even though property assessments may have gone up 30 percent, that doesn’t necessarily mean that tax payments will go up that same amount. In fact, they very likely will not.”
In California, there is no guesswork for property owners or the government, as assessed value increases are capped at 2 percent per year unless there is a change in ownership, value is added by new construction, or the property has recovered value after the owner received tax relief from a “decline-in-value” status. Additionally, the tax rate is fixed at 1 percent of assessed value, plus any additional amount approved by voters in local tax and bond elections. Under this system, property owners can accurately predict their maximum property tax for decades into the future, and taxes do not increase when neighbors make major improvements to their properties.