Letter of FIndings June 14, 1991
Topic Code: N090 Document Reference:
Letter of FIndings June 14, 1991
Mr. Bair has asked that I examine the information that you submitted to him for review and provide a response to your inquiry pertaining to the property tax exemption contained in Iowa Code ยง 427.1(34). As you are aware, this statute was enacted in 1976 and was somewhat unclear as to what property would qualify for the exemption. Rule 80.4, Iowa Admin. Code, was drafted to assist assessors in the administration of this statute. The two subrules which appear to me to be under controversy are subrules 80.4(6) and 80.4(11). Subrule 80.4(6) states that the income of residents residing in these properties is not to be considered in determining the property's eligibility for tax exemption. As a result, the property may qualify for exemption regardless of how high an occupant's income may be. The statute makes no reference to the income of residents and the rule was purposely drafted to exclude the income of residents as a factor in determining a property's eligiblility for exemption. Any inclusion of income as a determining factor would require a statutory change rather than a rule change. A rule cannot impose a restriction that cannot be reasonably inferred from the statute it is intended to implement. The other subrule which appears to be the subject of disagreement is 80.4(11). This subrule allows a prorated exemption when a portion of the total structure is used for an exempt purpose and a portion for a nonexempt purpose. I agree with you that those portions of the property that are used for nonexempt purposes are taxable but I do not agree with you that the entire structure is taxable because a portion of it is used for a nonexempt purpose. Unfortunately, I guess I agree with the nonpr ofit organization on these two points if my understanding of the situation is correct. I suggest that you discuss this matter with your county attorney for a second opinion if you are not comfortable with mine. Sincerely, Ed Henderson Policy Section Technical Services Division