Iowa Property Tax Exemption for Geothermal Heating or Cooling Systems


Under prior law, the value added to residential property from any new construction or retrofitted installation of geothermal heating or cooling system was subject to property tax.

New Provisions

For any new construction or retrofitted installation of geothermal heating or cooling systems occurring on or after July 1, 2012 on residential property, the value added to the property by the construction or installation is exempt from property tax. The taxpayer should file the exemption claim with the assessor no later than February 1 of the first assessment year the exemption is requested. Once the exemption is allowed, the exemption will continue for ten consecutive years without the need for further filing the claim or until the property ceases to be classified as residential, whichever occurs first.

In the case of a retrofitted installation, the amount of the “value added” is the difference between the assessed value of the residential property on January 1 of the year prior to the year in which the geothermal system is completed and the assessed value of the property on January 1 of the year following the completion of the geothermal system. 

In the case of new construction, the amount of the “value added” is the difference between the assessed value of the residential property if the property had been built with a non-geothermal heating and cooling system and the assessed value of the property with the geothermal system. 

Taxpayers do not lose the right to the exemption if they fail to claim the exemption in the year directly following the year the geothermal system was completed.

Iowa Code section 25B.7 (relating to funding of property tax credits and exemptions by the state) does not apply to this newly enacted property tax exemption.

Section Amended

Section 2 of 2012 Iowa Acts Senate File 2342 amends section 427.1, Code Supplement 2011, by adding new subsection 38.

Effective Date

May 25, 2012 for assessment years beginning on or after January 1, 2013.

12 SF 2342-A

Iowa Department of Revenue 42

 

Prior Law