August 16, 2022

The tax man cometh

Some of us have already been introduced to the property tax evaluator currently working in Union County. It is again time for the dreaded property tax evaluation.

Each piece of property in Union County will be evaluated to be sure that it is assessed properly and equally to other property in the state of Iowa. The stated purpose is to ensure that all property in the county is assessed based on the actual value of the property, not the price it was sold for 20 years ago. The idea is to ensure that property is evaluated on the same basis throughout the entire state of Iowa, so that property value will be uniform throughout. State law requires this to be done on a periodic basis in every county in the state.

The person doing the valuation of your property will be properly trained and certified. They will no doubt be courteous in any interaction they may have with you. You do have the right to refuse to allow them into your home. Such refusal will not prevent the re-evaluation of your property. They will simply estimate the current value of your home. Your property value may be changed by this activity.

There are some pitfalls in this process.

First, you are probably aware the selling price of homes has been rapidly increasing during the last couple of years. One of the purposes of the re-evaluation is to identify and capture this increase and use the new value for the calculation and assessment of your property taxes.

Second, you may not be aware the effect of the current price inflation of your home may be temporary. Already, because of run-away inflation, mortgage interest rates are rapidly increasing. Rates a year ago were around 4%. Mortgage rates today are around 6%, and likely will increase because of the pressure of inflation. This has a very negative effect on the selling price of your home. The loan value and thus, the actual value of your home, is being reduced right now because of the higher mortgage interest rates.

There is some built-in tension right now that may adversely affect your taxes in the future. Home sales have slowed. This will cause a reduction in the value (selling price) of your home.

The question is; will the scheduled property tax re-evaluation reflect the recent increase in property values, or will the very recent and very real reduction of the value of your home be considered? This is a real issue, and will, no doubt, lead many property owners to appeal the new evaluations.

Why does the actual property valuation by the assessor matter? The many tax assessing bodies in the county calculate taxes based on several different criteria. Many taxing authorities base the collection of taxes on a fixed rate. In other words, the tax code allows them to assess at least part of their taxes on a fixed by law rate on the entire assed value of your property subject to property tax. It works like this: They are allowed to collect a certain percent of the value of your property assessment. If your assessment goes up, the property tax automatically goes up.

Some taxing bodies prepare and approve a total spending budget for the ensuing year. This is then applied at an equal rate to each property, sufficient to raise the required income.

Many taxing authorities use a mixture of the fixed rate for part of their budget and the floating rate for the balance of their budget.

Now, I am not opposed to property taxes. These taxes provide for the operation of our schools, construction and maintenance of roads, police and sheriff departments, fire protection and many other valuable services we expect and want our various government agencies to provide for us.

Many of the property taxes have been voted on and approved by our citizens. We need to be diligent, watchful and look at the public services we pay for with our property taxes.

The price of gas in Creston was $1.86 a gallon on Jan. 20, 2021, when President Joe Biden was inaugurated. It now sells for $4.35 a gallon. Bacon was 99 cents a pound and now is selling for $4.99 a pound. Can you get formula for your baby yet?

Mike Lang, Chairman

Union County Republican Central Committee