Des Moines Tax Abatement Program
Learn how to access this program and reduce your property taxes for ten years
The city of Des Moines offers a special program called a tax abatement for homeowners who renovate their homes. This program helps you save money on your property taxes for 10 years after you finish fixing up your house.
For many people this can be a game changer; and help you get your dream home that would otherwise be unaffordable.
Normally, when you improve your home, its value goes up, and so do your property taxes. But with this program, you’ll keep paying the lower taxes based on what your home was worth before the renovation, otherwise known as the basis. This way, you get to pay less in taxes for 10 years, even though your house is worth more!
To qualify, the renovation must be approved by the city and must comply with all applicable zoning laws and building permit rules.
By following these steps, you can make your home better and more valuable without worrying about higher taxes for a full ten years!
Let’s say you own a single family home in Des Moines with an assessed value of $100,000. You pay $2,100 per year in property taxes.
You renovate the property and the city assesses your updated home at $300,000. Because of the increased valuation, your property taxes will increase to $6,300 per year.
Now let’s see how qualifying for the tax abatement reduces your property taxes:
If approved for the abatement, your property taxes will be based on the pre-renovation valuation of $100,000 (i.e., your basis) as opposed to the post-renovation valuation of $300,000. This means your taxes in the first year after renovation will stay at $2,100, giving you a first year property tax savings of $4,200.
What about subsequent years?
Let’s assume that you make no further investment in your home, and your assessed value increases at 4.00% annually due to inflation. Because of the abatement, the 4.00% annual increase will be applied to your $100,000 basis; not the $300,000 assessed value.
As illustrated in the chart below, your annual tax savings actually increase in years 2 through 10. For example, in comparison to your first year savings of $4,200, you will save $4,913 in year 5 and $5,978 in year 10. Over the full ten year period you will save a grand total of $50,426 in property taxes.
This example is based on the following assumptions: (1) the property tax levy rate is 2.10% of assessed value; and (2) the assessed value increases at an annual inflation rate of 4.00%. This is an estimate only; your taxes will be determined by the actual assessed value, levy rate, and any adjustments applicable to your property.
If you don’t own a home to renovate, you can still access the Des Moines tax abatement program. Here’s how.
Let’s say you are in the market for a home; and you prefer a classic home in a dynamic urban neighborhood over a suburban cookie-cutter. The Invest DSM Single Family Developer Program is what you need. Invest DSM provides financing that allows professional developers like us to restore these properties to the highest quality.
We make sure that each renovation project we take on is approved for the Des Moines tax abatement program. This means that you get a high-end renovation bundled with a major reduction in property taxes for a full ten years.
You need to submit an application and provide detailed project information that demonstrates to the city that the proposed renovation meets all the requirements for the tax abatement.
The information you need to provide generally includes:
Property Address and Legal Description The exact location and legal description of the property for which you're seeking the tax abatement.
Owner Information Your full name, contact information.
Proof of Ownership Documentation, such as a deed or title, that you own the property.
Proof of Eligibility Detailed information about the work completed and proof that the project increases the property's value.
Building Permits Copies of all building permits associated with the construction, improvements, or rehabilitation of the property.
Construction or Improvement Costs Documentation showing the total costs of construction or improvements, such as receipts, contracts, and invoices.
Property Value Documentation A statement showing the pre- and post-improvement or construction value of the property. An assessor's report may be required.
Project Completion Date The date on which the construction or improvements were completed.
Photographs Before-and-after photos of the property to show the improvements or construction completed.
Certificate of Occupancy A certificate of occupancy, proving that the building is ready for use.
Compliance with Zoning and Code Regulations Confirmation that the property meets all zoning laws and city codes, and is not in violation of any city regulations.
Energy Efficiency Documentation showing that the renovation meets all energy efficiency standards.
You can obtain the official application form and further details from the City of Des Moines website.
Avoid the hassle! Let us handle the approval process for you.
Getting Approved
Whether you own a home in need of a makeover or are interested in buying a renovated classic, the Des Moines Tax Abatement Program can be a game changer.
But as much as we love the tax abatement program, it can be a real hassle to get approved. You have to apply before the project is completed, file a ton of paperwork, keep detailed records, demonstrate the increase in valuation, and jump through other hoops. Not fun!
But here’s the good news. We work with the city of Des Moines all the time on tax abatements for our clients, and we know the ropes. When you engage us as your contractor on an eligible renovation we handle the abatement from application to approval for you.
Contact us to learn more.
The information on this page is provided for general purposes only and is not tax advice. We encourage you to visit the City of Des Moines website for complete program details and consult your tax advisor to fully understand how this program may affect your specific situation.
