Did you know you can save a lot of money on your property taxes with tax abatement? The Des Moines area has multiple types of tax abatements available. Read on for further information on tax abatement as well as what programs are available in various communities.
What exactly is tax abatement?
A real estate tax abatement is a reduction or elimination of property tax obligations for a specified time period.
In other words, if your home is eligible for a tax abatement, you won’t have to pay the full tax bill during this time (typically several years). Since property taxes can cost up to 3-4% of your property value each year, the savings can add up quickly. Tax abatements can save you thousands of dollars over a specific period.
Tax abatements are intended to provide an incentive for new construction, improvements, and renovations. They’re used to attract new buyers or encourage homeowners and investors to improve property either city-wide or in designated areas of a city.
Every program has its own specific rules and limitations. Some require you to make improvements to your property to receive the tax break. Others offer full or partial tax abatements on all new construction. Some have a graduated schedule, and others don’t.
A tax abatement is always attached to the property. So, if you have a tax abatement on your home for seven years, but you decide to sell it after five years, the new owners will receive the remaining two years of tax abatement.
Local tax abatements
Des Moines, Iowa
The city of Des Moines offers temporary property tax abatements on improvements and renovations to specific properties in designated locations. The city offers different schedules for additions, renovations, and improvements, depending on the targeted area and type of improvements. To receive a tax abatement, property owners must meet the program requirements, fill out an application, and obtain necessary permits and inspections.
Adel is located about 20 miles west of Des Moines. Adel has been offering a 100% seven-year tax abatement on new construction and home improvements through their Urban Revitalization program since 2012. The program continued for all homes built through 2018. The tax abatement scales down over a three year period starting in 2019. The program ends after 2020.
Altoona currently has a tax abatement program on new construction and home improvements. Homes can receive a full tax abatement of up to $75,000 added value for five years. Some stipulations apply.
Norwalk offers a tax abatement on new single-family homes on up to 30% of the assessed added value for a 5-year period (up to $75,000 added value). Homeowners must complete an application for tax abatement.
Pleasant Hill, Iowa
Pleasant Hill offers a tax abatement on new construction, additions, and renovations. Even home-improvement projects, such as new siding or windows can be eligible. An application is required.
Van Meter, Iowa
Van Meter has a tax abatement program for new construction, additions, and renovations. The abatement follows a graduated schedule and lasts for five years. An application is required.
If you’re looking to buy a new home and wonder if a new construction home in a tax abatement area makes sense, let’s talk. The process may seem intimidating and overwhelming but it doesn’t have to be. I’m here to answer your questions and simplify the process.