The Assessor is NOT to Blame

Don’t miss who is truly in charge of your property taxes. When county board, city council, and school board members increase spending, taxes go up; when their spending decreases, taxes go down. It’s as simple as that.

We’ve all heard it around our communities: “Watch out: the assessor is coming around, which means property taxes are going up!” or “Don’t let them near your home, or they will increase the value and make your taxes go up!”

To the contrary, tax assessors around Iowa are not responsible for increases in your local property taxes, and having an accurate assessment of your home’s value is nothing to be afraid of.

In reality, the final tax you pay on your home or business is the result of budgets established by your local taxing jurisdiction. So, you should blame your county board, city council, and school board members if it is high. When their spending increases, taxes go up; when their spending decreases, taxes go down. It’s as simple as that.

Matching the assessment of your home to its true market value is necessary for taxes to be levied fairly. Essentially, the assessor determines the share of the overall tax burden each property owner is required to carry. If your home is overvalued, you are paying more than your fair share, and if it’s undervalued, you are paying less. That is why assessors drive around your county inspecting homes: to ensure assessed values are accurate, so the tax rate is applied fairly.

Iowa has many state policies preventing growing assessments from automatically meaning huge jumps in your tax bill. The state reviews each county’s assessments and attempts to “equalize” them so the distribution of taxes is done as fairly as possible. Additionally, an assessment limitation for residential and agricultural properties does not allow assessments to increase more than 3% statewide.

The following step-by-step explanation describes how the property tax rate is determined:

  • 1. The value of the property is established by the assessor. This is called the “assessed value.”
  • 2. The assessments of all taxable properties for each classification (residential, commercial, agricultural, etc.) are added together and sent to the county auditor.
  • 3. Assessment limitations are applied:
    • a. Equalization: The Iowa Department of Revenue compares each county assessor’s data to a study the department completes independently of property sales in each jurisdiction. If the assessment (by property class) is 5% or more above or below the study, then the department decreases or increases the assessment accordingly to ensure the aggregate value of assessments closely mirrors actual transactions.
    • b. Rollbacks: The Department of Revenue applies an assessment limitation formula. If the increase in the aggregate value of homes or farms exceeds 3% due to revaluation statewide, the values are “rolled back” to that level on the entire class of property.
  • 4. Budgets are established and approved by each taxing entity and sent to the county auditor.
  • 5. A tax rate is established. The county auditor divides the budget amount by the taxable value of all property in the taxing district. Since more than one taxing jurisdiction calculates a tax rate for the property, all rates are added together, resulting in a single tax levy called a “consolidated levy.” This consolidated levy is always the result of two or more tax rates established by different government entities.
  • 6. Credits, such as the Homestead Credit, are subtracted.

The assessment process should always be examined to determine if improvements can be made; accuracy and transparency must be the goals. But no matter what value is placed on a property, the assessor does not set a single local government budget, nor are they the biggest recipients of your property tax dollars. Don’t miss who is truly in charge of your property taxes.

To learn more about your local property tax bill and how you can stop the spending that is ultimately responsible for higher property tax bills, visit www.itrlocal.org.