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Tax credits

Iowa Property Tax Credits Overview 

Homestead Credit

First enacted in April of 1937, its purpose was two-fold: to alleviate some tax burden on homeowners during the Great Depression and to encourage ownership in the State. For FY2021 the state legislature appropriated $142.7 million to fund the credit. 100% payment of this credit is mandated to county governments. In the past, the state has not fully funded this credit, which effectively forced counties to levy for an unfunded credit.

Eligibility

A person filing for the credit must live in the house on July 1, which is when the claim paperwork is due. The claimant does not need to file the claim again if he or she lives on the property on July 1 of the successive years and lives on the property six months out of the calendar year. If the property is transferred because of a divorce, the spouse retaining ownership does not need to refile for the credit. Written notice to the assessor is required if the owner ceases to use the property as a homestead, the property sells, or the claimant dies. Second homes and investment properties are not eligible for this credit.

Calculations

The value of the credit varies by taxing jurisdiction due to varied tax rates. It is based on the amount of property tax due on the first $4,850 of the homestead’s value.

EXAMPLE: If your total tax rate is $30/1000 then calculate your credit as follows: 

  1. $30/1000 x $4,850 ...



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