Qualifications For Business Property Tax Credit
To determine if an application qualifies for the credit, consider these 9 issues in the following order:
1. The parcels must be within the same county to qualify.
a. City/County jurisdictions must coordinate the applications for credit for qualifying contiguous parcels between city and county boundaries.
2. The property must be classified and taxed as commercial, industrial or railroad to qualify for the credit.
a. The following do not qualify for the credit:
i. Section 42 housing: Section 42 housing that is valued based on the special valuation procedures does not qualify for the multi-residential classification and remains classed as commercial property. SF 2466 2014 legislation allows for a property owner that has Section 42 housing to elect to withdraw the property from the special valuation procedures for Section 42 housing. If a property does this election, it may qualify for classification as multi-residential.
ii. Multiresidential property
3. A "person" is defined in Iowa Code section 4.1 to include the following:
c. Limited liability company
e. Governmental subdivision or agency
f. Business trust
i. Partnership or association
j. Or any other legal entity
4. If the land or improvements are not subject to a property tax it will not be eligible for the credit.
a. Share a common boundary
b. Within the same building regardless of boundary
c. If property is owned to the middle of the road in fee simple title the parcels are considered contiguous. Rivers, alleys, or railroads may be considered in the same context as roads.
d. If a third party, including a public body, owns the road, alley or railroad in fee simple title it is not contiguous.
e. Changed October 23: Cable TV property if connected by cable lines is considered contiguous is amended and replaced with: Underground or overhead cables do not create contiguity.
f. Cell Towers in the same ownership name and classed as either commercial or industrial sharing a common boundary are considered contiguous. NEW added October 23: Underground or overhead cables do not create contiguity.
g. Wind turbines that are taxed as buildings on leased land and all parcels are classed as commercial or all parcels are classed industrial and in the same ownership are considered a unit as long as the land upon which they sit is contiguous, regardless of the ownership of the land parcels. NEW Added October 23: The electrical grid is considered in the same context as Cable TV underground or overhead wire-line connections, and does not constitute sharing a common boundary.
6. If the parcels are buildings on leased land what is their common boundary?
a. As long as the buildings on leased land parcels sit on land that shares a common boundary they are considered contiguous. The ownership of the land that the parcels sit on does not matter.
7. If the parcels meet all of the taxation, classification, ownership and contiguous requirements, then determination of if the multiple parcels are operated by that "person" for a common use and purpose is the next consideration.
a. Owner occupied businesses that are similar in nature or type comprise a common use and purpose. As an example an owner occupied bicycle shop and a contiguous owner occupied bicycle repair shop would be considered a common use and purpose and therefore comprise one unit. If the owner occupied businesses were not similar in nature or type they would not be considered one unit. An example would be an owner occupied bicycle shop and a contiguous owner occupied restaurant.
b. Leased property comprises a landlord common use and purpose.