I love my home, but not its assessed value
Posted on 03/23/2015 at 10:36 AM by William Stiles
City and county assessors will soon be issuing their assessments for the assessment date of January 1, 2015. Whether you are a homeowner or the owner of commercial, industrial or agricultural property, you do have some options if you believe your property is over-assessed. Real property valuations in Iowa are based upon the fair and reasonable market value of real estate and its improvements as of January of each year. Complete re-evaluations are to be made in the odd-numbered years. Thus, 2015 is a year for re-evaluations. In odd-numbered years property owners have more grounds in which to protest their assessed value than in even-numbered years. If you believe your property is valued more than its market value, you can file a protest to your local Board of Review. The time frame for filing begins April 16 and ends on May 5. The manner of protesting your assessment involves filing a petition (the form is available from your Assessor) with the local Board of Review asserting one or more of the statutory grounds for the protest. The grounds for appeal in odd year protests include:
1) that your assessment is not equitable as compared with assessments of other like property;
2) that your property is assessed for more than the value authorized by law;
3) that the property is exempt from assessment;
4) that there is an error in the assessment; and/or
5 that there is fraud in the assessment.
Although from a taxpayer's standpoint, you may think the assessment is fraudulent or done in error, those grounds deal with mathematical or factual data error or false information used in computing the assessment. Ground three is primarily used by charities such as churches and other non-profit companies. Generally speaking, the primary grounds asserted in most protest are grounds 1 and 2. For residential protests, many owners compare their property to their neighbor's homes of similar characteristics and assert that their assessment is not equitable compared to those similar properties. In asserting this ground for protest, the property owner must list the other properties that reflect their assessment as not comparable. The statute states that a representative number of comparable properties must be listed in the protest. Although no specific number of comparables is provided in the statute or case law, one or two is probably insufficient. A property owner should submit four to six comparable properties to substantiate this ground of appeal. By far the most often used ground asserted alleges that the property is assessed for more than is authorized by law. This ground constitutes the vast majority of appeals on commercial and industrial property. To understand the basis for this ground of protest, you have to look at the statutory scheme for assessing real property. The Iowa Code provides that all property shall be valued at its actual value which is defined as its market value. Market value is defined in the Iowa Code as the price for which a willing seller will sell his/her property and the price that a willing buyer will pay, both being fully informed and not any compulsion to sell or buy. Consequently, if property is assessed for more than this market value it is assessed for more than authorized by law. Real property is valued professionally by licensed real estate appraisers by using three methods/approaches to arrive at its fair market value. These approaches include the cost approach (what it would cost to replace the property), the sales comparison approach (what other similar properties sold for) and the income approach (capitalization of the net income). The income approach has no applicability to owner-occupied residential property. Thus, for many commercial and industrial properties (and some residential), the sales approach is the sole or primary approach taken to arrive at fair market value. The sales comparison approach is somewhat similar to ground number 1 in that it is important to select like kind of property. But rather than looking at the current value of similar property, one must look at the sales price of similar properties. Recent sales of truly comparable property will reflect what your property would more than likely sell for. Generally several comparable sales are examined to arrive at a weighted value that reflects what the proper assessed value should be. If your assessment is greater than that analysis, you are in a position to assert that your assessed value is greater than authorized by law. In filing your protest, you can submit your protest solely upon the information contained in your protest form (and attachments, if necessary) or you can elect additionally to appear before the Board of Review to argue/assert your position. Due to the limited time that the Board of Review is authorized to be in session, coupled with the number of protests filed, property owners are often allotted only 5 minutes, at most, to make their case. After all protests are heard and considered the Board of Review will simultaneously issue the decisions on all appeals on a date specific. All aggrieved property owners who did not get a reduction in their assessed value or the reduction was not in the amount requested, have the right to appeal the decision of the Board of Review. All appeals must be taken (perfected) within twenty (20) days after the Board's decision. Property owners have a choice on how they appeal the Board of Review's decision. They can either appeal to the Iowa Property Assessment Appeal Board ('PAAB') that convenes for hearing in Des Moines or they can appeal to the Iowa District Court for the County in which their property is located. Although there are several considerations to be taken into account in deciding where to appeal, most property owners make the decision based upon two criteria: (1) an appeal to PAAB is generally faster and less expensive (if you have not hired an independent appraisal for your property and do not want to incur that cost, PAAB's informal process coupled with the fact that, by statute, they can decide what is the proper assessed value of your property may be the preferable route); and (2) depending upon how far you want to appeal the assessment, you may select going to District Court since if you are not satisfied with the judge's ruling (there is no right to a jury in assessment appeals) you can appeal to the Iowa Supreme Court and it will be considered anew. Anew means all evidence will be re-examined and no inference of correctness is attributed to the District Court. If you appeal from PAAB, all factual findings (such as data on your property, interpretation of comparable property, etc.) are not reviewable. Your only basis of appeal from an adverse PAAB ruling is that PAAB committed an error in the application or interpretation of the law. Consequently, if you appeal to PAAB, that is often the end of your appeal process. In District Court the Court can only arrive at a decision based upon the evidence presented. It cannot independently arrive at a value which PAAB is authorized to do. This is a very general overview of the process of protesting/appealing your property's assessment. Our office has several attorneys with a significant number of years' experience in this field that can assist you. But most importantly, do not forget to start the process between April 7 through May 5, 2015.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
Categories: Table SALT, Bill Stiles, Real Estate & Land Use
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