Program to offer tax cuts for home improvements, increased value of home

By  | 

DUBUQUE, Iowa (KCRG-TV9) -- As Iowans prepare to file their taxes, some people are also looking out for tax exemption opportunities.

One program offers homeowners a chance to improve their properties in older neighborhoods while getting a tax break.

The City of Dubuque started their Urban Revitalization Program years ago in order to help homeowners with new improvements or improving the value of their home.

But some in the department have seemed to wonder if many homeowners who live in these areas may not know what the program does.

They say the whole purpose of the program is to provide tax relief for people who make those investments.

They hope to provide reassurance so people are not afraid to invest in their home and make significant improvements.

"If you do a home improvement, it's likely to increase the value of your home, and as likely to be reflected in your taxes," said Erica Haugen, Community Development Blot Grant & Housing Choice Voucher Supervisor for the city of Dubuque. "This way, you can do a nice improvement to your home and it can be affordable because you won't have to pay tax on the value of that improvement for ten years."

The city defines an improvement as increasing the value of the building by at least 10 percent in a single family, or 15 percent for multi-family homes.

Dubuque has a lot of old homes and architecture. Because of the age of some of these properties, the program has previously seen a lot of use.

The Urban Revitalization Program focuses on specific areas, defined in Iowa code as ones that should be preserved or restored to productive use. With so much old architecture in the city, they had to determine which parts of the city could be approved for these projects.

"Basically it has to be in an area that will benefit from the investment and the built infrastructure," Haugen said. "So it's an area that may have been experiencing blight or decline, or maybe it's an area with historic housing."

Haugen said in the past these homes will be purchased for lower prices, then renovated to a better state.

Haugen explained when home buyers do this, the home is still taxed at the rate of which the home was purchased.

For instance, if a home was bought for $40,000, the home would be taxed at that rate and not after renovations.

To learn more about the Urban Revitilization Program, visit the city's website.