Are Polk County Property Taxes reset upon sale?

Question

Do property taxes in Iowa get reset upon sale at the sale price? Or do appraisers set values to recent sales of the property when reviewing values?

Chase Keller · Answer

Hey @Mitch H.

Property taxes do get reset upon a purchase. While really slow and inefficient, they aren't dumb.
Otherwise assessors are on a 2-ish year cycle for reassessments.
As far as how they determine values...who knows. They're consistently inaccurate in my experience. However, they are typically a bit lower than what I think a sale could bring.

Anthony Wick · Answer

Fun little story. Polk County just sent me a delinquent tax notice for my very first payment due after purchasing my duplex. It appears my mortgage company "mistakenly" didn't pay my property taxes! So, just another thing to look at besides the amount of property taxes.

Mitch H. · Answer

@Chase Gochnauer thats good to know you have had success contesting values.  I underwrite 1.75%-2.0% of purchase price as annual RE Tax expense.

Erik Fisk · Answer

I'm sure Chase has turned a lot more deals in Iowa, but my experience has been mixed.  I've had purchases where the taxes aren't revisited until the normal yearly cycle, and I've had sales where the assessor's office will hound me with information about value (especially if they think it may be undervalued).  I'm looking at you, Polk County.

However, I haven't seen the assessor's office (even if they get information from you suggesting it's grossly over- or under-assessed) actually changed the assessed value until the time they usually get to change it.

Chase Gochnauer · Answer

I've never had an assessment altered from a purchase on residential, though. They will just increase it on the next scheduled re-assessment.

Commercial-type property is likely different and they are more diligent there from what I understand.

Chase Gochnauer · Answer

My house came with 6.5 acres in a separate parcel. When I purchased it they conveniently switched it from Ag to residential last year and increased it from like $20k assessed value to $150k. That wasn't much fun :) They also accidently counted my outbuilding on BOTH my house parcel and my out lot parcel, so I was double assessed for it. Had I not been watching closely who knows how long it would have been to catch that.

I contested a lot of my rentals when they re-assessed last year. I've had good luck working with them in that regard. If I have an appraisal that says less, or I disagree with the condition, etc. they will adjust. I usually try to be data driven in my contest.

I probably had 10-15 properties this past re-assessment that I got reduced back down.

Bought one for $312k in March 2017, then they assessed later in 2017 for $359k. I disputed and they reduced back down to $312k(less than the $324k it was assessed for when I bought it). I believe it's supposed to be the value of the property on Jan 1 of the assessment year. So even if I had bought in March and completely rehabbed the whole thing, it should be Jan 1 value, not rehabbed value.

Ryan Oelmann · Answer

@Anthony Wick

I often wondered how Iowa's taxes compared because they do seem out of control. I see people in other states talk about 500k value properties with taxes that are half of a 250k value property here.

Anthony Wick · Answer

Of course, Iowa taxes as a whole are ridiculously expensive. I paid way less property taxes when I lived in Sacramento than I do in Ankeny, IA.

Chase Keller · Answer

@Mitch H.  Yes, I believe that they are lower than today's potential sale price.  We are certainly in a higher than average market price right now.  Potentially the top, potentially still going up...who knows.  I'm thankful that they are being fairly reasonable and not pushing the taxable value up as high as they could probably justify in the current market

Mitch H. · Answer

Thanks @Chase Keller.  That confirms my suspicion.  It seems like most Polk Co taxes payable land at about 1.75% of assessed value.  Maybe you thinking the assessed values are always a bit lower than 'market' value is due to the relatively strong market there right now.  Less concerned about valuation methodology than how I can estimate my real estate tax bill.

Are Polk County Property Taxes reset upon sale?

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