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ILA Letters
& Press Releases
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Iowa Landlord
Association
December, 2002 E-Mail Bulletin
Friday, December
6th, 2002
IN THIS
UPDATE:
=======================
--> SUBSTANTIAL INCREASES
IN POLK COUNTY ASSESSMENTS
FOR PROPERTY TAXES COMING VERY
SOON
Your directors and lobbyist met today with Jim Maloney,
Polk County Assessor; Dale Hyman, Deputy Assessor and Greg Lynch who
is the head of the Commercial appraisers in the assessor's
office.
This meeting took place because of your concerns with
the letters put out by their office concerning the increases in
assessed values of residential rental property.
State law
requires all counties to keep a 100% assessment ratio. The
assessment ratio is called the "median sales ratio". For conversion
properties in Polk County, the median sales ratio was 71% for the
year 2002. To come up with this ratio, the Polk County assessor's
office takes the assessed value for all converted property sold in
2002 and divides it by the sales price of all converted property
sold in Polk County. For example, if a property is assessed at
$80,000 and is sold in 2002 for $100,000; the sales ratio would be
.80. The State Department of Revenue, by state statute, requires the
county to maintain a 100% assessment ratio. In this example the
assessed value must be raised 25% ($80,000 x 1.25 = $100,000). Every
sale of converted property in 2002 goes through the same analysis to
come up with the "median sales ratio", and according to the letter
sent out of the assessor's office that ratio was 71% for converted
property. Median just means that there are an equal number of higher
ratios as there are lower ratios.
The letters stating the 71%
median sales ratio for converted property requires a 40% increase to
maintain the 100% assessment ratio, which as stated before, is
required by state law.
Others received letters stating an
increase of 25% in the assessed value. These apply to apartments
that are not converted rentals. In their case, the median sales
ratio came up to 75% which requires a 25% increase in the assessed
value to maintain a 100% assessment ratio.
All this sounds
complicated, but it is all predicated on what the state law requires
the county assessors to do. If the county assessors did not raise
the assessed values to maintain that 100% assessment ratio, the Iowa
Department of Revenue would mandate it anyway.
Questions have
come up about sending in Income and Expense Statements as requested
by the letters sent out.
According to Jim Maloney, these
statements are normally used to lower the assessed value, but not
always. When the assessor's office receives these statements, they
look at the net income and then add back mortgage interest and
depreciation to come up with a net to determine the capitalization
rate. This cap rate is then used to calculate an assessed value.
This value can be lower based on this net but every so often it can
be used to raise the assessed value. Sending in the Income and
Expense Statement becomes a personal decision. If your net income is
low (after adding back in interest and depreciation) you should
probably send it into them. If you ever plan to protest your
property taxes, the first thing the Board will ask for is the last
three years of an Income Statement. Without these statements at the
appeal process, you will probably lose.
What do we do now. As
most of you may have heard, the 2003 state legislature will be
dealing with the huge issue of property taxes across the board
including: residential, commercial and agricultural. That is why we
have a lobbyist to represent our interests in the Legislature.
Currently, residential rental property 3 units and up is taxed as
commercial property which receives little or no rollback at all.
That needs to be changed when this issue comes up for debate. This
is quite a challenge when you consider all the other interested
parties in this debate.
If you have any questions, e-mail us
at: information@iowalandlord.org
This is a tough issue that comes at the heels of other
increases landlords have been subjected this year. It is up to us to
take our concerns to the state level, learn who your legislative rep
is; let them know your concerns and support our
lobbyist.
==============================================
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=======================
Iowa Landlord
Association
P.O. Box 13246
Des Moines, IA 50310
Phone:
515-270-2796
Fax: 515-255-0675
Email: information@iowalandlord.org
Web: http://www.iowalandlord.org/
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