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House Study Bill 65 - IntroducedA Bill ForAn Act 1relating to the determination of market value for
2property tax assessment purposes and including applicability
3provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 441.21, subsection 1, paragraph b,
2subparagraph (1), Code 2023, is amended to read as follows:
3(1) (a) The actual value of all property subject to
4assessment and taxation shall be the fair and reasonable market
5value of such property except as otherwise provided in this
6section. “Market value” is defined as the fair and reasonable
7exchange value-in-exchange of the fee simple interest of the
8property in the year in which the property is listed and valued
9between a willing buyer and a willing seller, neither being
10under any compulsion to buy or sell and each being familiar
11with all the facts relating to the particular property and does
12not include an exchange that is value-in-use. Sale prices of
13the property or comparable property in normal transactions
14reflecting market value, and the probable availability
15or unavailability of persons interested in purchasing the
16property, shall be taken into consideration in arriving at its
17market value. In arriving at market value, sale prices of
18property in abnormal transactions not reflecting market value
19shall not be taken into account, or. If, however, transactions
20reflecting market value of the property or comparable property
21are not available, transactions not reflecting market value
22may be used, but shall be adjusted to eliminate the effect of
23factors which distort market value, including but not limited
24to build-to-suit, sale-leaseback transactions; leased fee
25sales; sales to involving immediate family of the seller, or
26related parties; foreclosure or other forced sales,; contract
27sales,; discounted purchase transactions; or purchase of
28adjoining land or other land to be operated as a unit.
29(b) “Fee simple” means absolute ownership unencumbered by
30any other interest or estate, subject only to the limitations
31imposed by the governmental powers of taxation, eminent domain,
32police power, and escheat.
33 Sec. 2. Section 441.21, subsection 2, Code 2023, is amended
34to read as follows:
352. In the event market value of the property being assessed
-1-1cannot be readily established in the foregoing manner, then
2the assessor may determine the value of the property using
3the other uniform and recognized appraisal methods including
4its productive and earning capacity, if any, industrial
5conditions, its cost, physical and functional depreciation
6and obsolescence and replacement cost, and all other factors
7which would assist in determining the fair and reasonable
8market value of the property but the actual value shall not
9be determined by use of only one such factor. The following
10shall not be taken into consideration: Special value or use
11value, value-in-use, or present use of the property to its
12present owner, and the intangibles, goodwill, or going concern
13 value of a business which uses the property as distinguished
14from the value of the property as property. In addition,
15for assessment years beginning on or after January 1, 2018
16 2024, and unless otherwise required for property valued by the
17department of revenue pursuant to chapters 428, 433, 437, and
18438, the assessor shall not take into consideration and shall
19not request from any person property insurance policies; loan,
20mortgage, or other financing information; franchise agreements;
21 sales or receipts data,; expense data,; balance sheets,; bank
22account information,; or other data related to the financial
23condition of a business operating in whole or in part on the
24property if the property is both classified as commercial or
25industrial property and owned and used by the owner of the
26business. However, in assessing property that is rented or
27leased to low-income individuals and families as authorized by
28section 42 of the Internal Revenue Code, as amended, and which
29section limits the amount that the individual or family pays
30for the rental or lease of units in the property, the assessor
31shall, unless the owner elects to withdraw the property from
32the assessment procedures for section 42 property, use the
33productive and earning capacity from the actual rents received
34as a method of appraisal and shall take into account the extent
35to which that use and limitation reduces the market value of
-2-1the property. The assessor shall not consider any tax credit
2equity or other subsidized financing as income provided to
3the property in determining the assessed value. The property
4owner shall notify the assessor when property is withdrawn
5from section 42 eligibility under the Internal Revenue Code
6or if the owner elects to withdraw the property from the
7assessment procedures for section 42 property under this
8subsection. The property shall not be subject to section 42
9assessment procedures for the assessment year for which section
1042 eligibility is withdrawn or an election is made. This
11notification must be provided to the assessor no later than
12March 1 of the assessment year or the owner will be subject to a
13penalty of five hundred dollars for that assessment year. The
14penalty shall be collected at the same time and in the same
15manner as regular property taxes. An election to withdraw
16from the assessment procedures for section 42 property is
17irrevocable. Property that is withdrawn from the assessment
18procedures for section 42 property shall be classified and
19assessed as residential property unless the property otherwise
20fails to meet the requirements of subsection 14. Upon
21adoption of uniform rules by the department of revenue or
22succeeding authority covering assessments and valuations of
23such properties, the valuation on such properties shall be
24determined in accordance with such rules and in accordance with
25forms and guidelines contained in the real property appraisal
26manual prepared by the department as updated from time to time
27for assessment purposes to assure uniformity, but such rules,
28forms, and guidelines shall not be inconsistent with or change
29the foregoing means of determining the actual, market, taxable
30and assessed values.
31 Sec. 3. APPLICABILITY. This Act applies to assessment years
32beginning on or after January 1, 2024.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-3- 1Code section 441.21 generally governs the assessment of
2property for property tax purposes and provides that the actual
3value of all property subject to assessment and taxation shall
4be the fair and reasonable market value of such property except
5as provided in that Code section. “Market value” is defined
6as the fair and reasonable exchange in the year in which the
7property is listed and valued between a willing buyer and a
8willing seller, neither being under any compulsion to buy
9or sell and each being familiar with all the facts relating
10to the particular property. Sale prices of the property or
11comparable property in normal transactions reflecting market
12value, and the probable availability or unavailability of
13persons interested in purchasing the property, shall be taken
14into consideration in arriving at its market value. However,
15sale prices of property in abnormal transactions not reflecting
16market value shall not be taken into account.
17This bill modifies the definition of “market value” to be
18the fair and reasonable value-in-exchange of the fee simple
19interest of property in the year in which the property is
20listed and valued between a willing buyer and a willing seller,
21neither being under any compulsion to buy or sell and each
22being familiar with all the facts relating to the particular
23property, but excluding an exchange that is value-in-use. The
24bill includes a definition of fee simple.
25The bill also modifies the conditions under which
26transactions that do not reflect market value may be used
27by the assessor. Under the bill, in arriving at market
28value, sale prices of property in transactions not reflecting
29market value shall not be taken into account. If, however,
30transactions reflecting market value of the property or
31comparable property are not available, transactions not
32reflecting market value may be used, but shall be adjusted to
33eliminate the effect of factors which distort market value.
34The bill adds build-to-suit, sale-leaseback transactions, and
35leased fee sales to the list of such transactions and modifies
-4-1the provision governing the use of sales to immediate family
2of the seller.
3The bill also modifies Code section 441.21(2), which
4specifies that in the event market value of the property being
5assessed cannot be readily established using transaction data,
6then the assessor may determine the value of the property using
7the other uniform and recognized appraisal methods including
8its productive and earning capacity, if any, industrial
9conditions, its cost, physical and functional depreciation and
10obsolescence and replacement cost, and all other factors which
11would assist in determining the fair and reasonable market
12value of the property, so long as the actual value is not to be
13determined by use of only one such factor. The bill adds to the
14prohibited considerations the value-in-use or present use of
15the property, intangibles, or going concern value of a business
16which uses the property. The bill also adds property insurance
17policies; loan, mortgage, or other financing information; and
18franchise agreements to the list of prohibited considerations
19and things that may not be requested by the assessor and
20modifies conditions for other items prohibited under current
21law.
-5-md/jh
2property tax assessment purposes and including applicability
3provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 441.21, subsection 1, paragraph b,
2subparagraph (1), Code 2023, is amended to read as follows:
3(1) (a) The actual value of all property subject to
4assessment and taxation shall be the fair and reasonable market
5value of such property except as otherwise provided in this
6section. “Market value” is defined as the fair and reasonable
7exchange value-in-exchange of the fee simple interest of the
8property in the year in which the property is listed and valued
9between a willing buyer and a willing seller, neither being
10under any compulsion to buy or sell and each being familiar
11with all the facts relating to the particular property and does
12not include an exchange that is value-in-use. Sale prices of
13the property or comparable property in normal transactions
14reflecting market value, and the probable availability
15or unavailability of persons interested in purchasing the
16property, shall be taken into consideration in arriving at its
17market value. In arriving at market value, sale prices of
18property in abnormal transactions not reflecting market value
19shall not be taken into account, or. If, however, transactions
20reflecting market value of the property or comparable property
21are not available, transactions not reflecting market value
22may be used, but shall be adjusted to eliminate the effect of
23factors which distort market value, including but not limited
24to build-to-suit, sale-leaseback transactions; leased fee
25sales; sales to involving immediate family of the seller, or
26related parties; foreclosure or other forced sales,; contract
27sales,; discounted purchase transactions; or purchase of
28adjoining land or other land to be operated as a unit.
29(b) “Fee simple” means absolute ownership unencumbered by
30any other interest or estate, subject only to the limitations
31imposed by the governmental powers of taxation, eminent domain,
32police power, and escheat.
33 Sec. 2. Section 441.21, subsection 2, Code 2023, is amended
34to read as follows:
352. In the event market value of the property being assessed
-1-1cannot be readily established in the foregoing manner, then
2the assessor may determine the value of the property using
3the other uniform and recognized appraisal methods including
4its productive and earning capacity, if any, industrial
5conditions, its cost, physical and functional depreciation
6and obsolescence and replacement cost, and all other factors
7which would assist in determining the fair and reasonable
8market value of the property but the actual value shall not
9be determined by use of only one such factor. The following
10shall not be taken into consideration: Special value or use
11value, value-in-use, or present use of the property to its
12present owner, and the intangibles, goodwill, or going concern
13 value of a business which uses the property as distinguished
14from the value of the property as property. In addition,
15for assessment years beginning on or after January 1, 2018
16 2024, and unless otherwise required for property valued by the
17department of revenue pursuant to chapters 428, 433, 437, and
18438, the assessor shall not take into consideration and shall
19not request from any person property insurance policies; loan,
20mortgage, or other financing information; franchise agreements;
21 sales or receipts data,; expense data,; balance sheets,; bank
22account information,; or other data related to the financial
23condition of a business operating in whole or in part on the
24property if the property is both classified as commercial or
25industrial property and owned and used by the owner of the
26business. However, in assessing property that is rented or
27leased to low-income individuals and families as authorized by
28section 42 of the Internal Revenue Code, as amended, and which
29section limits the amount that the individual or family pays
30for the rental or lease of units in the property, the assessor
31shall, unless the owner elects to withdraw the property from
32the assessment procedures for section 42 property, use the
33productive and earning capacity from the actual rents received
34as a method of appraisal and shall take into account the extent
35to which that use and limitation reduces the market value of
-2-1the property. The assessor shall not consider any tax credit
2equity or other subsidized financing as income provided to
3the property in determining the assessed value. The property
4owner shall notify the assessor when property is withdrawn
5from section 42 eligibility under the Internal Revenue Code
6or if the owner elects to withdraw the property from the
7assessment procedures for section 42 property under this
8subsection. The property shall not be subject to section 42
9assessment procedures for the assessment year for which section
1042 eligibility is withdrawn or an election is made. This
11notification must be provided to the assessor no later than
12March 1 of the assessment year or the owner will be subject to a
13penalty of five hundred dollars for that assessment year. The
14penalty shall be collected at the same time and in the same
15manner as regular property taxes. An election to withdraw
16from the assessment procedures for section 42 property is
17irrevocable. Property that is withdrawn from the assessment
18procedures for section 42 property shall be classified and
19assessed as residential property unless the property otherwise
20fails to meet the requirements of subsection 14. Upon
21adoption of uniform rules by the department of revenue or
22succeeding authority covering assessments and valuations of
23such properties, the valuation on such properties shall be
24determined in accordance with such rules and in accordance with
25forms and guidelines contained in the real property appraisal
26manual prepared by the department as updated from time to time
27for assessment purposes to assure uniformity, but such rules,
28forms, and guidelines shall not be inconsistent with or change
29the foregoing means of determining the actual, market, taxable
30and assessed values.
31 Sec. 3. APPLICABILITY. This Act applies to assessment years
32beginning on or after January 1, 2024.
33EXPLANATION
34The inclusion of this explanation does not constitute agreement with
35the explanation’s substance by the members of the general assembly.
-3- 1Code section 441.21 generally governs the assessment of
2property for property tax purposes and provides that the actual
3value of all property subject to assessment and taxation shall
4be the fair and reasonable market value of such property except
5as provided in that Code section. “Market value” is defined
6as the fair and reasonable exchange in the year in which the
7property is listed and valued between a willing buyer and a
8willing seller, neither being under any compulsion to buy
9or sell and each being familiar with all the facts relating
10to the particular property. Sale prices of the property or
11comparable property in normal transactions reflecting market
12value, and the probable availability or unavailability of
13persons interested in purchasing the property, shall be taken
14into consideration in arriving at its market value. However,
15sale prices of property in abnormal transactions not reflecting
16market value shall not be taken into account.
17This bill modifies the definition of “market value” to be
18the fair and reasonable value-in-exchange of the fee simple
19interest of property in the year in which the property is
20listed and valued between a willing buyer and a willing seller,
21neither being under any compulsion to buy or sell and each
22being familiar with all the facts relating to the particular
23property, but excluding an exchange that is value-in-use. The
24bill includes a definition of fee simple.
25The bill also modifies the conditions under which
26transactions that do not reflect market value may be used
27by the assessor. Under the bill, in arriving at market
28value, sale prices of property in transactions not reflecting
29market value shall not be taken into account. If, however,
30transactions reflecting market value of the property or
31comparable property are not available, transactions not
32reflecting market value may be used, but shall be adjusted to
33eliminate the effect of factors which distort market value.
34The bill adds build-to-suit, sale-leaseback transactions, and
35leased fee sales to the list of such transactions and modifies
-4-1the provision governing the use of sales to immediate family
2of the seller.
3The bill also modifies Code section 441.21(2), which
4specifies that in the event market value of the property being
5assessed cannot be readily established using transaction data,
6then the assessor may determine the value of the property using
7the other uniform and recognized appraisal methods including
8its productive and earning capacity, if any, industrial
9conditions, its cost, physical and functional depreciation and
10obsolescence and replacement cost, and all other factors which
11would assist in determining the fair and reasonable market
12value of the property, so long as the actual value is not to be
13determined by use of only one such factor. The bill adds to the
14prohibited considerations the value-in-use or present use of
15the property, intangibles, or going concern value of a business
16which uses the property. The bill also adds property insurance
17policies; loan, mortgage, or other financing information; and
18franchise agreements to the list of prohibited considerations
19and things that may not be requested by the assessor and
20modifies conditions for other items prohibited under current
21law.
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