Commercial and Industrial Tax Assessments Jump Across Iowa: The Protest Window Closes May 1

Property tax assessments have sharply increased across Iowa, particularly for commercial and industrial property. One report in Polk County noted that “most commercial properties saw their valuations jump 18.9%.” That same report further explained, “Most of the county’s industrial properties also experienced average increases in assessed values of 19.5%.” Only a few days remain (until April 25) for taxpayers to contact their assessors to negotiate informal settlements of their 2023 real estate assessments, and all protests must be filed on or before May 1, 2023. Property owners and operators must act immediately to review their new assessments and — if those revised values are excessive — protect and preserve their rights to seek reductions.

An assessment must reflect a property’s market value as of January 1, 2023. The assessor should consider what factors, physical and economic, impacted a property’s value as of the assessment date. In doing so, assessors must value only a property’s fee simple interest — i.e., the “sticks and the bricks,” plus the land. They may not assign value to personal property, such as machinery and equipment, or the business conducted on the property. By necessity, assessors throughout Iowa conduct mass appraisals of taxable real property. They do not have the time, tools and resources to individually assess each individual property using the most relevant and applicable data. Mistakes inevitably are made, and taxpayers have a right to seek the correction of over-assessments.

Property values are typically measured by application of three traditional approaches to value: the cost, income capitalization and sales comparison approaches. In Iowa, there is a strong preference for the sales comparison approach. Taxpayers should consider, therefore, what their property would have sold for in an arm’s-length, market level transaction as of the assessment date. If the assessor has assigned a value to a property higher than what it could reasonably be expected to sell for on the open market as of January 1, 2023, the taxpayer should consider taking the necessary steps — by the end of this April — to correct the excessive assessment.