House File 2552, Division 11 passed in the 2022 legislative session and signed by the Governor on May 2, 2022 repealed the Business Property Tax Credit (BPTC). In lieu of the BPTC, beginning with assessment year 2022, all commercial, industrial, and railroad properties receive a property assessment limitation on the first $150,000 of value of the property unit equal to the assessment limitation for residential property. The value of the property unit that exceeds $150,000 receives the same ninety percent assessment limitation it has in the past. The $125 million fund is appropriated each year for reimbursements to counties. However, the last payment for this appropriation will be made FY2026-2027. County auditors file a claim for the first tier of the assessment limitations in September. Assessors will continue to provide the unit configuration for auditors as these definitions remain the same. Taxpayers are not required to file an application to receive the first $150,000 of assessed value at the residential assessment limitation rate.
List items for Two-Tier Assessment Limitations
The new two-tier assessment limitation applies to property units. “Property unit” means a parcel or contiguous parcels all of which are located within the same county, with the same property tax classification, are owned by the same person, and are operated by that person for a common use and purpose. Iowa Code section 441.21(5)(f)(3)). The assessor shall determine which parcels comprise a property unit.
The assessor shall report the actual value of commercial and industrial property units subject to Tier One (1) assessment limitation to the auditor.
The first tier consists of an amount equal to the product of the assessment limitation percentage applicable to residential property under Iowa Code section 441.21(4) for that assessment year multiplied by the actual value of the property that exceeds zero dollars but does not exceed one hundred fifty thousand dollars. Iowa Code section 441.21(5)(c)(2)(a).
Note: the second tier is an amount equal to ninety percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars. Iowa Code sections 441.21(5)(b)(2)(b) or 441.21(5)(b)(2)(b). This Tier Two (2) amount is not used to calculate the claim amount.
Claim amount steps:
Determine the amount of value by tax district subject to the Tier One (1) assessment limitation under Iowa Code section 441.21(5)(b)(2)(a) or 441.21(5)(c)(2)(a).
Calculate the difference between ninety percent (0.90) and the assessment limitation percentage applicable to residential property by tax district.
Multiply that by the amount of value from Step 1.
Multiply that calculated value by the consolidated levy rate and divide by 1,000.
Example of calculating the claim: The aggregated sum of actual value by property unit subject to the Tier One (1) assessment limitation in the tax district is $1,000,000. The residential assessment limitation percentage is 0.56, the consolidated levy rate is 33.00000.
$1,000,000 X (0.90 - 0.56) X (33/1000) = $11,220
The claim would include all tax districts with commercial, industrial and railroad property units.
