Tax Credits & Exemptions
Iowa law provides for a number of credits and exemptions, including Homestead Credit and Military Exemption and provides that it is the property owner's responsibility to apply for these. If the property you were occupying as a homestead is sold, or if you cease to use the property as a homestead, you are required to report this to the assessor in whose jurisdiction the property is located.
Homestead Tax Credit
Any person who owns a dwelling and the land it sits on and who occupies said dwelling may qualify for a homestead tax credit. To be eligible, a homeowner must occupy the homestead any six months out of the year, but must reside there on July 1 and must claim Iowa as his residence for income tax purposes. This exemption is a reduction of the taxable value of the property amounting to a maximum $4,850 or the amount which does not allow the taxable value to be less than zero. Application is to be made on or before July 1 of the claim year. Disabled veterans are allowed to claim a homestead credit that would be equal to the entire amount of taxes levied on the homestead property. The exemption is not allowed if the combined income of the veteran and their spouse, if any, exceeds $35,000 in the prior income tax year. Income means taxable income for federal income tax purposes plus income from any political subdivision exempt from federal income tax. (refer to code of Iowa, Chapter 425)
Military Tax Exemption
To file for the exemption, the property owner must be a resident of Iowa and meet one of the following qualifications;
- Honorably discharged veteran who served in eligible service period.
- Honorably discharged veteran who served for a minimum of 18 months, or for fewer than 18 months because of a service related injury.
- Former member, or member who is currently serving, of Reserve Forces or Iowa National Guard who has served at least 20 years.
- Member of Reserve Forces or Iowa National Guard who was activated for Federal duty, not including training for a minimum or 90 days.
- Former member of the Armed Forces whose enlistment would have occurred during the Korean Conflict but chose to serve 5 years in the Reserve Forces.
New applications must be made with the Assessor on or before July 1 of the year the exemption is first claimed. As with the Homestead Tax Credit, the exemption remains in effect until the property owner is no longer eligible. This exemption is worth the taxes calculated on $2,778 for WWI veterans and $1,852 for all others after that time. (Refer to Code of Iowa Chapter 427)
It is the responsibility of each person who qualifies for and wishes to receive a military exemption, to make application with the county assessor and also have their discharge papers (DD214) recorded in the appropriate county. Application is to be made on or before July 1 of the claim year.
Family Farm Tax Credit
This credit is available to all farm operators who own and operate farm land, or farm land owned by a family member such as parents, children, grandparents, grandchildren, brother, sister, aunt, uncle, niece, nephew. Cousins do not qualify.
Family Farm One-Time Filing
If a claim for the family farm credit is filed by November 1, 2001, or thereafter, and approved, further filing is not required provided the claimant owns the property on July 1 of subsequent years and the designated person actively engaged in farming the property remains the same.
If the ownership changes, the new owner must re-file for the credit and if the "designated person" changes, the owner must re-file for the credit.
The owner must notify the Assessor in writing of a change in the "designated person". Failure to do so will result in a penalty.
Contact the Assessor's office for more information on the complexities of this law. See Code of Iowa Chapter 425A.
CLICK HERE for a list of several other credits/exemptions. Filing is required on them as provided by Iowa law.