Tax Data Series

Real Property

Real Estate Taxes: Real Property Tax Relief
10 Percent and 2.5 Percent Rollbacks, and Homestead Exemption, by County, Distributed During Calendar Year 1994

State law (Section 319.302) requires the county auditor, after application of the tax reduction factors (see publication PD-23) in accordance with Section 319.301, to reduce all real property taxes by 10 percent. In addition, Section 323.152(B) requires the county auditor to further reduce the real property tax on owner-occupied property an additional 2.5 percent. Owner-occupants who are age 65 or older or who are permanently and totally disabled may qualify for further reduction in their real property taxes by applying for a homestead exemption under Section 323.152(A). A homestead exemption is granted for aged or disabled owner-occupants if their total income does not exceed $16,500. Effective for tax year applied and qualified for the homestead exemption in the year of death is eligible to receive the homestead exemption if (1) the surviving spouse was at least age 59 but less than age 65 on the date the deceased spouse died and (2) otherwise meets the homestead exemption requirements.

Local governments are reimbursed in full from the state general revenue fund for these tax reductions. The Department of Education reimburses the schools for their share of the tax reductions and the Tax Commissioner reimburses the counties, townships, municipalities, and special taxing districts for their shares of the tax reductions per Section 321.24(F) and Section 323.156. The county auditor also receives 2 percent of the amount reimbursed under Section 323.152 as payment for administering the homestead exemption and 2.5 percent rollback.

Table PD-1 indicates that for tax year 1993, the Departments of Taxation and Education together reimbursed local governments a total of $688.5 million, including $558.0 million for the 10 percent rollback, $50.8 million for the homestead exemption, and $79.7 million for the 2.5 percent rollback. Another $1.2 million was reimbursed by the Department of Taxation for refunds issued by the county to taxpayers that filed "late" applications for the tax year 1993 homestead exemption and 2.5 percent rollback reductions. Additionally, $2.6 million was paid by the Departments of Taxation and Education to county auditors for administering the homestead exemption and 2.5 percent rollback.