For property tax appeals, most Iowa counties utilize an administrative system. First, the property owner asserting an unfair property tax assessment by the county assessor’s office appeals to the county board of review. If not satisfied with the result there, the property owner may appeal to the Iowa Property Assessment Appeal Board (PAAB). The PAAB was established by the Iowa legislature under Iowa Code §421.1A(1) to establish a system of “equitable property assessment.” If that outcome is not satisfactory to the property owner, the case is appealed to the county district or trial court and then to the state’s appellate courts. Recently, the Polk County Board of Review appealed an adverse decision by the Iowa PAAB that land they determined should be classified as residential should be agricultural. The two cases demonstrate the importance of responding to county assessor’s inquiries and appealing adverse decisions. Also, when appealing these cases, it is important to have sufficient evidence of ag use on the part of the landowner.
In the first case, when property owners purchased four acres of rural land, the sale of the property triggered a review by the county assessor’s office, because the price was in excess of the general price per acre for agricultural property. The land had always been valued for its agricultural use. The assessor’s office asked for documentation that the land was being used for ag purposes. The property did contain a residence, hay barn, and sheep barn. Further, the property owners installed fencing for livestock and owned and hay rack and manure spreader. But, the property owners did not respond to the county assessor’s inquiries and the property was assessed as “residential.” The property owners protested to the county board of review. The board also determined that the land should be classified as residential. At a hearing before the Iowa PAAB, the PAAB reversed course and determined that the land should be classified as agricultural. The trial court agreed.
Since ag property is valued using a separate formula, it is very important to get the classification right. The county assessor is to value the land based upon their best judgment as to the status of the real estate as of Jan. 1 of the year in which the assessment is made. Here, the Iowa Court of Appeals. Ag real estate includes all tracts of land, improvements and structures that are primarily used for ag purposes (except the home which is used for human habitation). The county assessor must look to the character and use of the property and if that assessment is illogical, irrational, or arbitrary, the Iowa PAAB must reverse course. They did in this case, and the Iowa Court of Appeals backed them up.
The court determined that the property owners were “in good faith” using the property for an agricultural use. This case seems pretty clear cut, as the testimony and other evidence clearly show that the property was used for the breeding of sheep and the raising of alfalfa. Thus, the land was properly valued at its ag use. Polk County Board of Review v. Property Assessment Appeal Board and Schlieman, et al., No. 0-314/09-1310 (Iowa Ct. App. Aug. 11, 2010).
In the second case, the property owners appealed the county assessor’s and county board of review’s adverse assessment of their property as residential. The county assessor was alerted to the possible change in property use when the property owners built a large building on the property. The property owners asserted that this was a barn, used for agricultural purposes. Again, the PAAB found that the land should be classified as agricultural and the Board of Review appealed. At trial, the property owner asserted that the tax parcel consisted of 10.55 acres which had been partially used for grazing horses, alfalfa production, and timberland. He asserted that he used the land “in good faith” for agricultural purposes. The landowner was even able to show photos of the alfalfa harvest and a Schedule F showing the Profit and Loss for farming on the parcel. The landowner testified that the building was built for the purpose of starting a horse breeding operation. Further, the landowner was able to show that similar parcels in the area were classified as “rural agricultural.”
Thus, the Iowa PAAB and the trial court found for the landowner and determined that the land was being used agriculturally. The Iowa Court of Appeals agreed and found a good faith agricultural use, once again. Polk County Board of Review v. Property Assessment Appeal Board and Jungblut, et al., No. 0-496/09-1542 (Iowa Ct. App. Aug. 11, 2010).