Letter of Findings October 5, 1977

Topic Code: A131Agricultural Land Tax Credit (Prop)          Document Reference:

Letter of Findings October 5, 1977

TO: ALL COUNTY AUDITORS

SUBJECT: Military Exemption, Homestead Credit and Agricultural Land Tax Credit Computation As a result of the passage of House File 332, a large number of inquiries have been received by the Department of Revenue and the State Comptroller's Office regarding the correct procedure to be used in computing and applying the military exemption, homestead tax credit and agricultural land tax credit. The following examples will illustrate the correct procedure. 

   1976 Assessed Valuation of Buildings       $1,500 
   1976 Assessed Valuation of Land             2,000 = $3,500 
   1977-1978 Fiscal Year General School 
      Fund Levy                               $10.40 per  $1,000 
   1977 Assessed Valuation of Buildings        2,000 
   1977 Assessed Valuation of Land             2,500 
   1978-1979 Fiscal Year Consolidated Tax Levy-$20 per $1,000 
   Agricultural land tax credit pro rata percentage = 60%
Example 1—The 1978-1979 fiscal year taxes should be computed as follows: 

   $2,000           (1977 assessed value of buildings) 
    2,500           (1977 assessed value of land) 
  -------- 
    4,500           (gross valuation) 
   x   20           (1978-1979 tax rate per $1,000) 
  -------- 
       90           (gross tax) 
       (6)          (agricultural land tax credit = $5 x 2 x 60%) 
  -------- 
       84 
      (84)          ( homestead tax credit) 
  -------- 
      -0-           (net tax)
As you can see in this example, the agricultural land tax credit is deducted prior to the homestead tax credit deduction.

Example 2—-Using the same information as provided in example 1, let's assume the owner of the property received a military exemption of $1,852 in both 1976 and 1977.

The 1978-1979 fiscal year taxes should be computed as follows:

   $2,000           (1977 assessed value of buildings) 
    2,500           (1977 assessed value of land) 
  -------- 
    4,500           (gross valuation) 
   (1,852)          ( military exemption) 
  -------- 
    2,648           (net valuation) 
    x  20           (1978-1979 tax rate per $1,000) 
  -------- 
    52.96           (gross tax) 
    (4.94)          (agricultural land tax credit - $5 x 1.648 x 
                      60%) 
  -------- 
    48.02 
   (48.02)          ( homestead tax credit) 
  -------- 
    -0-             (net tax)

As the 1976 net valuation for land and buildings is $1,648, the agricultural land tax credit is computed on this amount. Had the 1976 building valuation exceeded the amount of the military exemption, the agricultural land tax credit would then have been computed on the full valuation of the land. For example if the 1976 building valuation had been $2,000, the agricultural land tax credit would have been computed on the full $2,000 land valuation.

Any questions you may have on this matter may be directed to either the Office of the State Comptroller or the Credits and Exemptions Section of the Property Tax Division. 

Sincerely, __________________________      _________________________________ 
Francis R. Larew, Director      Michael L. Cox, Administrator 
Local Budget Division           Property Tax Division 
State Comptroller's Office      Iowa Department of Revenue